Small and Medium Enterprises (SMEs) have faced unprecedented levels of change over the past few years as they have navigated a volatile and unpredictable landscape. In the UK, BREXIT confusion and disruption and the devastating impact of the Covid-19 pandemic have made recent years for SMEs turbulent, to say the least. While there is light at the end of the tunnel, ongoing supply chain disruption, the war in Ukraine and rising costs continue to make business environments treacherous and full of risk.
For businesses that are going global and have touch points across different countries and regions, it can be particularly challenging as financial and political factors affect territories around the world at different times and with differing levels of severity.
Unexpected volatility in foreign exchange markets can wipe out profit margins and dramatically increase costs when it comes to managing budgets abroad if they are not accounted for correctly. SMEs can be particularly exposed to this when managing the cost of importing and exporting their goods and services, hiring staff in different countries, and managing monthly invoices. It is therefore imperative that you take the right precautions as a business owner to protect your income and future trading forecasts.
Our foreign exchange partner, Currencies Direct, has put together these top tips on how you can reduce your risks significantly when managing foreign exchange in your business.
- Identify your risk exposure:
When receiving payments from other countries, it is important to understand a range of different factors to assess how big the risk can be. Some factors to consider are the currency pairs you are dealing with, why you require foreign exchange and how often you plan to make foreign exchange payments.
- Measure your risk exposure:
It is important to understand how an undesirable rate can impact your profitability. A good practice here is also to look at any future events that are likely to influence the currencies you deal with.
- Understand all your options:
When dealing with foreign exchange risk, there are a number of different safety measures you can implement to protect you and your business. Some of these services can include:
- Spot contract: this is hedging in a favourable foreign exchange rate will be used for immediate delivery.
- Forward contract: this is an agreement that allows you to take advantage of a favourable rate for a future date.
- Market orders: These tools give you the autonomy to decide on rates you wish to receive or the minimum rate you are willing to accept. Once this is hit you will then automatically receive this rate.
It is crucial for SMEs to understand how exchange rates can impact profits and having a foreign exchange expert by your side to take care of your international payments can be a huge plus.
If you have any questions or would like further support regarding foreign exchange risk management, please feel free to reach out to Currencies Direct on +44 (0) 20 7738 0777, or contact Katie Keith.
More: Currencies Direct
Chris Jackson - Head of Corporate Sales at Currencies Direct
ps...Currency UK completes migration into Currencies Direct
Global Chamber® partner Currency UK has now completed its migration into Currencies Direct and is operating under the Currencies Direct brand.
Clients and partners of Currency UK will now have full access to Currencies Direct’s industry leading products and solutions, with the same high level of customer service they’ve come to know and trust.
In 2019 Currency UK was acquired by the Currencies Direct Group becoming a fully owned subsidiary. To allow Currency UK’s extensive client base to fully utilise the international payments solutions offered by Currencies Direct the decision was made to merge the brands into one.
Some of the enhanced service offerings include:
- Faster payment times
- Access to a larger number of payment corridors
- Access to advanced forward contract options
- Improve batch payments solution
- Add funds to your account via card or debit card
For Global Chamber® members that are using Currency UK’s services the same staff remain in place albeit now part of a larger Currencies Direct team based out of our head office in Canary Wharf, London.
More about Currencies Direct
Currencies Direct has been helping individuals and businesses save time and money on their currency transfers since 1996.
Over the years they’ve worked with more than 430,000 customers and have won awards including the ‘Best Business FX Provider’ in the 2023 Moneyfacts awards.
The company has offices in four continents and offers a unique level of personal support whether customers arrange their transfers online, over the phone or through the Currencies Direct app.
"The transition into the Currencies Direct brand leaves us strongly placed to support our partners and clients with strategic business growth for many years to come. For Global Chamber members it provides an opportunity to utilise industry leading international payments services from a team with extensive knowledge in the experience sector." - Katie Keith, B2B Partnerships Manager.
To begin utilising Currencies Direct international payments solutions and preferential exchange rates for Global Chamber® members, click here.
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