Britain’s small to medium sized international traders are being severely affected by volatile foreign currency value swings.
The claim was made by Bibby Financial Services (BFS) which quizzed 2000 UK based small to medium sized enterprises (SMEs) involved in imports and exports. Of that sample of international traders, 67 per cent reported ‘severe impacts' from currency valuations swings in the past year.
On average the damage caused by foreign exchange fluctuations cost each SME around £69,669 each in the past 12 months.
Since markets across the globe are rarely stable on a daily basis, the SME exporter is incredibly vulnerable, says BFS. Local economies and political decisions can also adversely affect exchange rates, which exposes traders to even greater risk. Currency fluctuations, logistics, paperwork and managing duty, VAT and freight payments are the biggest headaches for importers and exporters, it claims.
Despite this, nearly a quarter of the SMEs surveyed (23 per cent) admit that they have never reviewed their foreign exchange requirements.
Bibby’s foreign exchange (FX) service helps SMEs make and receive payments easily in 65 currencies. It aims to minimise the risk and maximise the profit for clients from trading overseas.
Many UK traders assume that the fact that everyone in Europe can speak English means there will be no language or cultural misunderstandings, according to David Webb, regional sales director for BFS.
Money is not the only currency that can shift according to market conditions, warns Webb. At first it can seem like everyone in a foreign market can speak perfect English but you cannot rely on that forever. “When you start asking for your money, it’s amazing how often people will suddenly lose their fluency,” said Webb. This is increasingly a major problem that international finance agents, with their multi-lingual credit controllers embedded in all the major territories, are having to solve for UK SMEs.
“Every country has its idiosyncrasies,” said Webb, “it saves a huge amount of time and energy if you have a partner who understands how payment terms work in each country.”
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