The recent unpredictability of FX rates has created a challenge for businesses nationwide. Yet new research by American Express reveals that UK SMEs trading overseas are reaping the rewards – and looking to boost their exports even further as a result.
The research, conducted in partnership with East & Partners, found that nine in ten SME exporters report that they are benefiting from the fall in sterling and that it’s increasing their margins – by an average of 16%. Furthermore, 95% of those that are already exporting are now planning to take advantage of these conditions by boosting exports even further over the next 12 months.
However, for SME businesses that only import, it’s a different story. 81% of importers report that their business is suffering in current conditions. Whilst their margins are falling by an average of 13%, their prices are increasing. 61% have raised their prices, with an average hike of 9%. A third are planning price increases over the next year.
Organisations that export and import are more confident than anyone in the research with 95% saying the fall in sterling has had a positive impact on their business, and the same number reporting increasing margins.
Jose Carvalho, Senior Vice President, Global Commercial Payments Europe at American Express, comments: “Exchange rates have a huge impact on UK SMEs with an international footprint, and on their ability to maintain their place in the local and global economies. Those already involved in exporting are seeing the business benefit, and whilst others currently focused on domestic activity might be daunted by the idea of exporting there are plenty of resources out there for ambitious businesses. Every day we work closely with small business owners to help them overcome the challenges posed by managing international payments and working capital. With the right tools and resources, your businesses can unlock growth opportunities both at home and abroad.”
Despite some SMEs benefitting from the fall in sterling, many still have concerns about fluctuating rates. More than a quarter (27%) of businesses say that the currency volatility represents a risk to the future of their business. A similar number highlight cash flow challenges from trading internationally, with 26% saying they can’t even predict what they’ll earn from a 30 day invoice.
American Express offers a range of services to assist with international payments, including foreign exchange services and global currency cards, helping businesses to trade in their buyers’ preferred currencies.