UK business in overseas trade push

UK businesses are doing more business overseas than at this time last year, but nearly a third of them are dangerously exposed to swings in exchange rates, according to new research by the international payments specialist, FEXCO Commercial FX Services.

In a survey of CFOs in medium to large UK firms trading overseas, two thirds of respondents said they have increased their levels of international business during the past 12 months.

The IT and telecoms sector led the international charge, with 77% of firms reporting an increase in overseas business in the past year. It was closely followed by manufacturing and the retail, catering and leisure sector, both of which saw overseas trade grow by 75%.

As a result an increasingly high proportion of business payments involve foreign currency, with 44% of firms saying that at least two fifths of their business is now transacted in a currency other than sterling.

David Lamb, head of dealing, FEXCO Commercial FX Services, said: “In the current climate of tight margins and volatile exchange rates, a sudden shift in the value of the pound can make the difference between profit and loss on a business deal.

“For example the pound slumped 5.3% against the euro in just one week in August – more than enough to turn a profitable deal into a loss-making one.

“Failure to fix an exchange rate can work in a company’s favour if it’s lucky, but with the stakes so high, it’s unwise to leave it to chance. So it’s alarming that such a large minority of companies leave themselves as hostages to fortune – and do nothing to protect themselves from exchange rate fluctuations.”