By Marcus Leach
UK small to medium sized businesses (SMEs) trading overseas are losing a staggering £216 million a year by using banks for their foreign exchange transactions and not shopping around for more competitive quotes.
New research from foreign exchange provider Moneycorp reveals that banks are taking advantage of SMEs by offering uncompetitive exchange rates and imposing high charges, which are proving to be a burden during the most challenging of times.
“Small businesses in the UK are throwing money down the drain by not paying due diligence when transferring money overseas. By securing the best prices and gaining expert guidance, businesses could be saving more than £2,000 on each international transaction,” Glenn Uniacke, Senior Dealer at Moneycorp commented.
The pound has struggled against most major currencies due to concerns about the viability of the UK's economic recovery. The research reiterates the need for financial directors to be extra vigilant in their overseas trades to take advantage of currency peaks and troughs; even the most modest appreciation in sterling’s value should be capitalised on.
According to official government statistics, there are 4.82 million SMEs (defined as firms with under 249 employees) trading in the UK. Approximately 100,000 of these companies are active within the import/export market.
It is evident that British companies will continue to throw away money unless they are prepared to be more proactive in looking for competitive pricing on foreign exchange transactions and ensure a foreign exchange strategy is in place. SMEs are the lifeblood of the British economy and exports are citied as vital to economic recovery but if small businesses fail to capitalise fully on overseas trade, they will be losing out on valuable savings at a time when additional income is crucial.
“The UK coalition government is counting on a private sector-led economic recovery and SMEs will be critical to this. However, with the number of SMEs declining, managing and maximising revenue is critical. The outlook is gloomy and currency markets will continue to be turbulent. An effective foreign exchange strategy is more important than ever,” Glenn Uniacke concluded.
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