American Express recently commissioned Opinium Research to survey 500 senior decision makers in SMEs that operate internationally on their views about trading internationally and dealing with foreign exchange volatility.
Why SMEs should take a proactive approach to FX volatility:
85% of SMEs surveyed said the recent fluctuation in the value of Sterling has caused some disruption to their business
- Over half (57%) of internationally trading SMEs say that taking a more proactive approach to managing foreign exchange volatility earlier would have benefitted their business
- Three quarters (77%) of SMEs agreed that the cost of doing business internationally has risen over the last 12 months, making it even more critical to manage FX volatility
How SMEs are feeling about navigating currency fluctuations:
- Nearly seven in ten (68%) of SMEs stated they would value advice and guidance on how to manage changes in currency rates, showing they are eager to learn and evolve their tactics to bolster growth
- Yet just half (51%) of the SMEs surveyed said they currently have a strategy in place to manage FX fluctuation and volatility
How SMEs are responding to the issue:
Three in 10 (29%) of SMEs surveyed intend to raise prices (the most common method)
- A fifth (21%) plan to reduce operating costs to help cushion the impact
- To support doing their business in different currencies, only just over a third of SMEs are using techniques such as:
– Hedging strategies (36%)
– Creating or accepting invoices in alternative currencies (33%)
– Using forward contracts (32%)
Challenges beyond currency fluctuations:
Almost three-fifths (58%) of SMEs surveyed cited the volume of paperwork and admin that comes with doing business internationally as a challenge
- One third (34%) cited the complex processes associated with making payments internationally
Harry Mole, Vice President and General Manager of Cross-Border B2B Payments, American Express, comments on the research: “As SMEs look to lay the foundations for a strong year ahead, managing risk and getting their FX strategies right needs to be a top priority for any business trading internationally. With uncertainty set to continue in 2023, SMEs should be proactive in tackling these challenges, along with seeking expert guidance that gives them the best chance for future success.”
METHODOLOGY:
American Express commissioned Opinium Research to survey 500 senior decision makers in SMEs that operate internationally. The research was conducted between 11-18 October 2022.