According to recent research by Fexco Corporate Payments, more than a third of UK firms that trade overseas are dangerously exposed to exchange rate fluctuation.
The survey (conducted by Censuswide) of 102 CFOs and key decision makers in medium and large UK companies that trade internationally also revealed that UK firms had carried out more business overseas in 2015 compared to the previous year.
The IT and telecoms sector led the international charge, with 77% of firms in the sector reporting an increase in overseas business in 2015. It was closely followed by manufacturing and the retail, catering and leisure sector, both of which saw overseas trade grow by 75%. Naturally as a result of increased international trading, business payments now involve foreign currency much more frequently. In fact, over 44% of firms reveal that 40% of their business is now transacted in a currency other than sterling.
What is striking about the findings is that almost 32% of respondents do very little to protect themselves from exchange rate volatility. When transactions are made, these businesses simply accept the exchange rate of the day. However if rates change adversely between the time a business deal is struck and payment is made, profit margins can be eroded or completely wiped out. The pound fell 5.3% against the euro in just one week in August of last year which underlines the necessity for businesses to manage currency risk effectively.
Fexco Commercial FX provides international money transfer & payment solutions for personal and business customers. If your business trades internationally you will need to manage your exposure to unnecessary currency risks. Call our experienced FX dealers today (Ireland: 1800 246 801 UK: 0800 840 2887) and discover how we can help you to protect your bottom line. You can also register online for a free account with no obligation to trade.