Nearly half of SMEs are worried about currency markets
The growth and profitability of internationally-trading SMEs could be affected by volatile exchange rates.
A nationwide survey (by foreign exchange service providers 'World First') of more than 1,000 senior decision makers at UK-based SMEs that make cross-border payments, found that although 83 per cent of SMEs operating in the manufacturing industry fear that currency volatility from the EU referendum will impact their business, 35 per cent are failing to take any notice of foreign exchange markets. Furthermore, 37 per cent do not see the importance of having a currency strategy.
The research also revealed the extent to which manufacturing SMEs remain exposed to currency fluctuations, with 47 per cent admitting they have been caught out by a sudden movement in exchange rates and one fifth having been severely impacted by market volatility.
The findings demonstrate a lack of appreciation on how important the exchange rate is and how its movements impact business. Of those surveyed, 43 per cent admitted that they did not fully understand and 49 per cent said that that currency markets ‘scare’ them.
Having a proper currency strategy in place could improve profitability for SMEs because failing to manage exposure to fluctuations will always impact the bottom line.
While there is a lack of clarity about the exact timings of the EU referendum, SMEs should take the initiative to help mitigate the risks of currency volatility by seeking professional advice.
If you require any further information regarding exchange rate movements then please do not hesitate to contact the office.
Author: Tim Preece FCCA
A former pupil at Lancaster Royal Grammar School, Tim joined Scott & Wilkinson in 1992 as a trainee after completing a degree in Maths and Economics at Leeds University and qualified as an Accountant in 1996. Tim was...
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