We recently took part in a webinar organised by Baldwins Accountants which considered the changes to the business landscape and the means of reviving commercial activities. With specialists in customs, VAT and business finance as well as currency concerns, it was a fascinating look at how companies can best use their resources to address the challenges of recovering from lockdown, the ongoing pandemic and the impending Brexit deadline.
Searching for information
A poll of webinar attendees showed that nearly half (46%) of the 80 attendees were waiting for more information before devising a strategy to address the changes to international trade, from border closures due to Covid-19 and trade wars to Brexit. While more information may be desirable, it’s clear that businesses can’t wait forever and understanding the flow of EU and global supply chains within an international trading environment is an essential aspect of any future strategy.
Understanding the risk
As part of the webinar, one of our Senior Account Managers Andy Medler highlighted the fluctuations in the market over the last year. While the pandemic had a clear impact on the currency market, fluctuations in the value of the pound have been particularly volatile in the last year as the Brexit deadline approaches. For example, in an exchange of GBP100,000 to euros, there was a variation of GBP12,500 depending on when the exchange was made and the same amount in US dollars showed a GBP13,500 variation. This shows that currency values can have a significant impact on the bottom line, increasing the cost of international trade and eroding margins.
Mitigating currency risk
As well as highlighting the recent movements in the market, Andy spoke about the range of currency tools available to address currency risk. Weighing up the pros and cons of spot contracts, market orders, forward contracts and currency options also underscored the importance of a bespoke FX strategy which addresses the unique commercial challenges and goals of each individual business. Talking about the partnership with moneycorp, Martyn Shakespear, National Head of Banking and Finance at Baldwins said,
“We know businesses have a lot of challenges at the moment and we take a holistic approach to our support of clients. We know that taking market performance, cash flow and currency risk into account, an FX strategy can help to mitigate some of the currency risk of overseas trade. It’s just one of the areas to consider when ensuring that an organisation is robust enough to ride out the possible storm of the coming months.”
Free FX health assessment for businesses
As we work hard to help businesses recover from such a challenging year, Andy concluded his session by highlighting the availability of a free, no obligation FX health assessment. By auditing previous transactions and looking ahead at future prospects, we can help organisations understand their measure of FX risk and provide more details on the hedging tools that may help to address any losses. What became very clear throughout the webinar is that more than ever, knowledge is power and understanding the impact of international costs and revenue on cash flow and profitability is more important than ever. Whether addressing the cost of currency fluctuations, understanding changes to customs procedures and valuations or calculating changes to VAT, businesses seeking to address the challenges of the future may benefit from watching the webinar and signing up for a free FX audit.
Watch the webinar here