SMEs reveal exchange rate concerns despite rising confidence
UK exporter confidence is on the rise but concerns continue to exist over current exchange rates, new research has revealed.
Despite uncertainty surrounding Brexit, confidence is strong among exporters in The British Chamber of Commerce’s latest Quarterly International Trade Outlook.
Developed in partnership with DHL, it reveals that sales increased during the first quarter of this year, with manufacturing and services businesses confident they will boost their revenues in the next 12 months.
The Index in the report focused on volumes of trade documentation that are issued by accredited Chamber of Commerce and showed a 5.5% rise in Q1.
Levels are also up by more than 9% year in year – marking the second highest on record – but anxiety over exchange rates has risen steadily compared to three months previously.
Currency fluctuations were seen as a main concern by more than half of manufacturers and a quarter of services firms when compared to the end of Q4 2016.
Poor rates can result in reduced trade, especially if the process is not cost efficient for the businesses concerned.
The report highlights the need for more trade deals and assistance for small businesses in order to combat any potential negative outcomes that may follow Brexit.
It is claimed this would also strengthen ties with emerging markets and boost investment in the long term.
More than a quarter of manufacturing firms reported improved export sales, with the report suggesting that the majority of firms are confident in their ability to continually sell stock overseas.
It also warns that rising operational costs could limit growth, as could recruitment issues if allowed to continue unchecked.
Spreading business across multiple currencies is recommended, as it prevents a business taking a hit should any one currency drastically reduce in value.
Should a business be concerned over its performance, turnaround management could provide insights into how best to find a solution.
This could cover a range of options from sourcing interim management to restructuring debt, implementing new financial models or contingency planning.
Such approaches can provide a more solid basis for operations and ensure that a business can cope should it be faced with any unexpected events or expenditure.
By Phil Smith