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Simpler, safer way for small businesses to deal with currency risk

Pound Sterling continued to plunge to new multi-year lows against the US Dollar this week and yet again many UK businesses active in international trade are feeling the squeeze. Numerous industries such as importers, and travel and logistics businesses are watching their profit margins being eroded or even wiped out by the effect of these currency moves.

Business owners are feeling the pain and are asking people that they trust - accountants and finance directors, etc. - what could be done.

It is difficult to reverse the clock but the situation highlights once again the importance of having a disciplined approach. To be able to avoid risks one needs to be able to understand where they come from, quantify them and implement a process that helps deal with them.  Without this, small businesses have historically been handicapped in international trade versus their larger peers. And most still remain so. 

Larger multinational corporations prudently manage their accounts payables and receivables in foreign currencies in advance – most of them with the help and solutions offered by their banks. This gives them a more stable balance sheet and cashflows – their finances are more immune to turbulent events as currencies swing around.

Unfortunately, most smaller businesses are either unaware of such solutions, don’t have access to them, or find them forbiddingly complicated and expensive. As a result, according to the British Business Bank, 96% of SMEs don’t manage their currency risks and thus are likely to find themselves in the current predicament.

At HedgeFlows we believe that the answer to this problem is a simpler and more affordable solution designed specifically for smaller businesses. It doesn't require educating thousands of small business owners and their finance managers about how to identify and manage currency risks, and how to account for or reconcile them. Instead, today's technology can help automate these processes and leverage the data that businesses often have.  This is precisely what HedgeFlows delivers by giving SMEs what they really need – a way to trade and grow internationally while managing their finances in Pounds Sterling.

Founded by former senior leaders from leading international banks who helped hundreds of multinational corporations improve their financial risk management, HedgeFlows is a unique platform built on cutting edge technology and a vision to make international trade simpler, and safer for growing businesses. We work with part-time finance directors, accounting firms and other partners to make finances in any currency simpler and help to level the playing field for growing businesses.