Nearly half of businesses have increased their FX transaction sizes

Companies are troubled by exchange rate volatility and cash flow issues

Exchange rate volatility and cash flow issues will continue to be UK businesses’ biggest concerns over the next 12-18 months, according to the latest Business Sentiment Survey from broker HiFX. Some 36% and 32% of businesses respectively cited these two issues as their biggest worries.

Meanwhile, availability of finance was least likely to cause concern, with just 13% flagging it as a problem. This indicates that corporates are finding it easier to gain access to finance than in previous years.

Just under half (48%) of businesses have increased their FX transaction sizes over the past six months, compared with 36% six months ago. When asked the reason for this, smaller companies (24%) are more likely to increase their transaction volume to try and get better deals through larger transactions. Conversely, larger corporates increased volume to protect themselves against volatile FX markets, with just under a third (31%) stating that this was their reason for doing so. For large and small corporates, business growth was a reason for 13% of corporates.

HiFX also asked businesses about their views on announcements made in the March 2014 Budget. Although it was heralded as the Budget for business and exporters, the research reveals many corporates disagree. Just one in 12 (8%) think that the announcements made by the chancellor will help to increase the volume of goods they export. And many are also unsure that the announcements made will have any positive impact on the growth of their business – over two-fifths (41%) said announcements wouldn't help and a further 34% said they were unsure.

Of the announcements made, plans to reduce energy costs for businesses (32%) topped the list of changes corporates thought would aid business growth.

Commenting on the survey findings, Jason Gaywood, director at HiFX, said: “There's a clear difference between smaller and larger corporates when it comes to reasons for increasing transactions and it's interesting to see that business growth was stated as a reason. While it appears smaller corporates are looking for the best deals, larger corporates are ensuring they're protecting themselves against volatile FX markets. What is important to remember is that although GBP/USD and GBP/EUR are currently trading at a tight range, they could break out at any time, so those transacting large volumes of money rely on their relative inactivity at their peril.”

About the author

Sally Percy is editor of The Treasurer

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