To succeed and expand, many of Irelands small and medium- sized enterprises (SMEs) are looking to overseas markets. As production chains become more internationalised, monetary unions expand and free-trade agreements multiply, they are becoming increasingly reliant on making overseas money transfers; leaving them at the mercy of the volatile foreign exchange market and its fluctuating rates that can significantly impact a business’s international payments.
There is cause for optimism for ambitious SMEs based in Ireland. A 2014 SME pulse survey conducted by PricewaterhouseCoopers, indicates that an overwhelming majority of Ireland’s SME sector are confident about the prospects for the Irish economy and their businesses. With many of the opinion that their business is in better financial health now compared to before the financial crisis some six years ago.
As an export-led economy, growth potential in foreign markets is important to Ireland. Thankfully, Irish SMEs are in growth mode, much of which is derived from tried and tested markets such as the UK. According to the survey, this upward trend is set to continue, with two-thirds (64%) of Irish SMEs planning to grow export volumes in the next 3-5 years. Of this, over a third (36%) plan to grow exports by more than 10%. The UK (81%) is the most important market for these exports, followed by Western Europe (50%) and North America (36%). A quarter are eyeing up China, while other markets such as Brazil, the Middle-East, Central and Eastern Europe, Africa and Japan are also of interest to nearly one in six.
Despite this optimism, operating internationally does not come without its risks. If Irish SMEs want to deal with our biggest trade partners the UK and US, as well as explore other emerging markets, then they will have to deal with currency exchange rates. And this will not only impact those seeking the most lucrative markets for goods and services overseas, but also SMEs looking to efficiently manage their outgoings and costs by importing the best value supplies.
The problem is that the currency markets are fluid. Meaning market exchange rates can change significantly in a short space of time. The movements might seem small but can have a big financial impact – particularly on the costs and income of growing businesses with tight margins.
For example, over the course of 2014, the euro fluctuated between $1.22 and $1.38 against the dollar. That’s a variance of more than 11% - so if you were unfortunate with the timing of your overseas payment, your exports could have been 11% less competitive or your imports 11% more expensive.
This is where the Irish Times International Money Transfer Service can help. The service is provided by exchange expert's moneycorp, who can offer your business specialist guidance around the foreign exchange market and international payment process. With exchange rates that are typically 2% better than a bank and transaction fees as low as €5, you can save money on your foreign exchange with moneycorp.
Once you open an account you will be assigned your own personal account manager. They will listen to your needs and help you develop a strategy to make the most of your foreign exchange requirements. Available at the end of the phone, they can guide you through the range of specialist tools available to help you make the most of your international payments. For example, your account manager could offer a “forward contract”. This allows you to lock today’s exchange rate, up to two years in advance of a payment, making planning your payments simple, as you won’t have to worry about foreign exchange market fluctuations.
Or, if the current rate is not one you would like to trade at, your account manager can arrange a “market order”. This enables you to target a rate you hope to achieve, but isn’t currently available, so you can make the most out of the market moving in your favour.
If you'd rather take direct control of your foreign exchange, you can manage and make your international payments online 24/7 with moneycorp's easy to use online platform. You can make payments in over 34 currencies and you will be able to view and track all of your past payments, so it's easy to manage your currency requirements at your convenience.
Whether you’re importing or exporting, there’s never been a better time to broaden your business horizons overseas. So, don’t let the foreign exchange market hold you back.