If you’ve found doing business in 2020 to be a challenge you are not alone. Almost all businesses have been put under pressure and, for a variety of reasons, the focus on efficiency and cost saving is firmly to the fore.
But, how can businesses that trade internationally make savings without having to reduce expensively trained and loyal workforces or indeed give up premises and assets that will be critical to making the most of the return to normal.
Mark Bolsom, Director of M3 Payments, looks at the issues and how an efficient exchange payment platform can help.
In May this year, Deloitte reported that Business confidence in the UK was at an all-time low, lower even than during the Global Financial Crisis.
The findings were based on a survey that measured the sentiment of Finance directors across a broad swathe of companies in the UK ranging from Large Corporates to SME’s.
Citing the COVID-19 pandemic and Brexit as the catalysts of pessimism, the survey revealed that the sharp fall in confidence was a result of the huge levels of uncertainty now plaguing businesses and business decisions.
Despite government support packages for business during this initial lockdown, 98% of CFOs expected businesses to reduce capital spending, with the same percentage also anticipating a slowdown in hiring.
76% of the companies surveyed stated that reducing costs is a strong priority as over half the firms had furloughed staff, reduced output and shut down facilities.
As the country once again stands on the brink of lockdown and the news around Brexit negotiations continues to disappoint, uncertainty is once again weighing heavily on companies throughout the country.
A recently leaked memo from Michael Gove warned of “significant change and challenge” when Brexit is finally completed at the end of the year.
Gove went on to warn of a “reasonable worst-case scenario” in which hauliers and businesses would not be ready for new paperwork and physical checks at borders, resulting in the risk of queues of 7,000 lorries stretching through Kent.
Should Britain fail to secure a deal in EU negotiations, tariffs would add £3.1bn to the cost of importing food and drink according to the British Retail Consortium. This represents a truly worrying figure as the UK grocery sector is already one of the most competitive in the world and already operates on tight margins. Furthermore, 80% of the food and drink imported into the UK comes from Europe.
Whatever benefits Brexit may eventually bring, it certainly looks like the cost of doing business internationally is going to spike in the short-term.
In practice a large percentage of these rising costs are likely to be passed on to consumers, but the truth is that, with Coronavirus already impacting the livelihoods of the population, most households can ill-afford higher prices.
This is the conundrum facing businesses involved in the import and export of food and drink today: how to offset the potential hike in costs without killing demand.
Furthermore, how can businesses retain their skilled labour and talent when faced with such exacting headwinds?
How can an efficient exchange platform help? One clear area in which all businesses could benefit from certainty is with making and receiving international payments.
It’s well documented, but often overlooked that businesses incur expensive charges when transacting internationally whether through banks or independent brokers. The truth is that all everyone should not only know exactly what the cost of international payments really is, but also consider just how consequential these costs really are.
Any excess charges incurred at the point of import or export only increases the risk of negatively impacting demand or eroding profit margins. Wastage, as a result of excessive exchange rates, can unsurprisingly cause firms to make cuts in other key areas: headcount, marketing and investment to name but a few.
Transacting internationally without clear understanding and oversight risks becoming a expensive, hidden cost to business and, in the current environment, can force companies into counter-productive decisions that have long-term consequences.
At M3 Payments, we are powered by Currency Cloud, the world leader in secure international payments technology. Our difference to the traditional and established methods of enacting currency transactions is that we believe in complete price transparency and offer the guarantee that pricing will not change over the course of the business relationship. We won’t sign you on only to increase our charges after a short introductory period.
- Savings based on buying euros with interbank rate at 1.10
Saving money here could be the difference between having to let staff or assets go and allow your business to be ready to benefit from the upturn when greater certainty returns.
With three pricing plans to choose from and no transaction fees, clients can rest assured that they are benefitting from market-beating exchange rates, a fast global payment network and an intuitive online platform.
Uncertainty may be with us for the foreseeable future, but with M3 Payments, clients will always know they are paying less. In these troubling times that certainty could prove invaluable.