How to manage international growth and currency risk in 2021
A global outlook has never been more important for UK SMEs. With Covid-19 shaking the country’s economic foundations, it has had a notable impact on international trade. In spite of the uncertainty caused by the pandemic, 2020 encouraged SMEs to seek new opportunities and reassess how to generate growth.
Realising the full exporting potential of small and medium-sized enterprises needs to be central to this reassessment - they account for more than 99% of all UK firms after all. Whilst the coronavirus pandemic deeply impacted how businesses operate at every level, it had a particular influence on accountants and their SME/SMB clients especially when looking at how they conduct business and how they interact with their clients. This is because the pandemic fast-tracked a digital transformation, forcing companies to rethink their business models to safeguard their future. As part of this transformation SMEs and enterprises were shaped by emerging trends such as remote working, omnichannel communications, and cloud strategy.
With new trends emerging in the marketplace, WorldFirst also witnessed a change in customer needs, including:
- More choice when it comes to markets, currencies, payment channels, and collection channels to facilitate entry to new market and cross-border opportunities
- SMEs transitioning to online channels
- An increased number of businesses launching through marketplaces like Amazon
- An acceleration of digitisation encouraging SMEs to look further afield to cross-border opportunities.
As evident from the above, both Brexit and Covid-19 have forced SMEs to adapt in order to stay competitive and explore new avenues for growth.
Through this shift in consumer behaviour, the process of digitisation has been fast-tracked, driving globalisation. In light of this, in many ways it has become easier for SMEs to do business anywhere, as advances in technology and the evolution of ecommerce continue giving business owners the confidence they need to expand globally into new markets.
Whilst the barriers to entry for SMEs to transition to a global model have significantly reduced, going global can open businesses up to potential risks concerning currency exposure. When businesses interact with overseas markets, be it importing machinery from Europe or exporting goods to China, the process will either involve receiving or sending foreign exchange currency, which naturally means you’ll experience exchange rate exposure.
This is where WorldFirst can help. If you are a business with clients or suppliers abroad, hedging your exposure to movements in exchange rates can have several benefits. WorldFirst offer currency hedging strategies for businesses, a service typically associated with the big banks. With over 16 years of experience, they have been working with SME clients since 2004, helping them better manage currency exposure, saving them money and time.