In order to help businesses consider the changes that might happen following Brexit, the British Chambers of Commerce (BCC) have developed a Business Brexit Checklist. This checklist aims to help companies at both operational and board levels.
Although the European Union and the UK have not yet reached a final agreement, there are a few steps that companies can already start undertaking to plan ahead.
Over the coming weeks we will be focusing on things to look out for to get your business ready for Brexit.
Number 2: Currency volatility and risk following Brexit
Here is what Antoine Agricole from the Greater Manchester Chamber of Commerce advises you to look out for regarding currency risks.
Following the Brexit vote in June 2016, the pound sterling fell in value against most currencies rather dramatically. According to the Telegraph, it lost 13 percent of its value against the US dollar and 16 percent against the Euro. While a weaker pound has had a somewhat positive effect for UK firms exporting, it is important to remember that the UK as a whole imports much more than it exports.
More than the loss of its value, the pound was subject to great volatility, sometimes as dramatic as currencies used in emerging markets, according to Bloomberg. This volatility exposes UK firms to greater risks when doing business abroad, especially when they lack knowledge regarding currency exchange and solutions to safeguard profit margins. In fact, lack of knowledge on exchange rates is one of the most common pitfall when exporting.
These problems of volatility and loss of value might arise again in the months leading to Brexit, especially because of the uncertainty surrounding the terms of UK’s departure. What can you do to face these challenges when importing, exporting, or simply doing business abroad? First, it is important to take into account the currency that you are being paid in. Knowing that, you need to consider the possibility of further currency movements, and how these might affect your contracts. A foreign-exchange service, such as the one we provide in partnership with AFEX, can help protect your business against adverse rate fluctuations and offer competitive exchange rate. Furthermore they will be able to help you and provide any information you need regarding currency uncertainty and exchange rates.
Do you need guidance or in-depth information about currency risk management and currency fluctuation? You can meet with our experts Tony Bescoby and Mark Deans from AFEX for a one-to-one meeting during our event Meet the Expert 2018 on 15th June. Find out more about the event and the 26 experts who will attend here.
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