North West firms embrace currency opportunity

North West firms embrace currency opportunity

Throughout the second half of 2016, changes in the value of the pound, the Euro and the Dollar have caused instability for businesses across the North West.

With markets fluctuating, it’s forcing businesses who trade internationally in both import and export marketplaces to thoroughly evaluate their approach to risk with currency.

We chat to some local firms who’ve worked with the Department for International Trade, to understand what the impact has been on their business to date, and what their hopes are for the future.

Graham Fraser, ‎corporate development director, Cataclean Global Ltd

"We have had a big benefit from this fluctuation in return on equity (GBP vs USD) as a significant proportion of our total revenue is generated in USD.

"However, to balance, on the negative side our cost of chemicals and other goods have gone up by up to 20% as these come from Europe!"

Steven Craft, director, Paw Print Games Ltd

"We have sometimes used the gambling/limit order option, where we have some USD - or other foreign currency - we wish to convert to GBP, but we feel today’s rate is not very good, so we can gamble and wait until the rate improves.

"As the rates fluctuate (sometimes dramatically) daily, we have placed orders to convert USD to GBP but only when the conversion rate reaches a set threshold. This certainly is somewhat of a gamble, as markets can go down as well as go up. If you are converting from a foreign currency to GBP, then Sterling going down in value is a positive thing, so you are gambling against GBP doing well.

"Although we are generally a risk adverse company, we have done a couple of limit orders, in both circumstance it worked out in our favour (although if we had held on to our USD until post Brexit, we could have got even more GBP from our USD).

"When we used limit orders, we didn't need access to any of the funds in question, and we knew we could wait over a year to receive the money before it made any impact on day to day business.

"We have to be careful to do currency conversion on the accounts using accurate conversion rates, when spending/receiving money, and any profit/loss that occurs from foreign exchange rate fluctuations are recorded separately."

Alex Marshall, group marketing and compliance director, Clarke Energy

"Currency fluctuations affect us, but it is not a ‘pure risk’ – i.e. it can have an upside as well as a downside.

"The engines we supply are manufactured in Europe and priced in Euros. The remaining plant we supply can have an additional Euro element, or may be Sterling priced.

"The recent drop in value of the GBP against other international currencies, particularly the Euro, means there is an upward pressure on price of the core generating set for UK projects. Likewise, this also affects our service prices.

"We can include currency fluctuation provision in our pricing and terms and conditions. Typically, our projects are realised 6-10 months after point of order. There is a currency risk element throughout this period that could be dealt with through different means such as hedging.

"As we report in GBP and around two thirds of our turnover is international trade and not in sterling, any increase in the international trade figures versus the domestic means the reported turnover figures are higher."

Graham Stewart, managing director, Alex Stewart International

"Our company has benefitted from sterling’s weakness; around 70% of our income is in Dollars, 15% is in Euros, the balance in Sterling.

"It’s been a blessing, never before has one single political (or government) decision impacted so positively on our company.

"We are small community, with 60 staff, 50 of which are based in Liverpool, and as an international service provider it is my hope that the current exchange rates might be sustainable for at least another year, this year has been great for international business."

The Exporting is GREAT initiative is a key element of the Government’s newly launched GREAT.gov.uk, a single digital destination for trade and investment, bringing together and connecting UK businesses, international buyers and international investors.