The pound continues to plummet in the shadow of Brexit. Recently, it hit an eight-year low, approaching parity with the euro. Given sterling’s downward spiral, it makes sense that some people scoffed when US President Donald Trump stated that the pound’s Brexit-induced depreciation would be beneficial for the British economy. However, it seems that weaker currency could be good news for UK businesses, after all. Here, DUA’s team of accountants in Watford explore how British entrepreneurs can take advantage of the weaker pound and succeed financially amidst the uncertainty.
Consider new markets and raise international brand awareness
While imports have become pricier, British exports are now cheaper and therefore much more enticing to other countries. To harness this appeal, British businesses can take an export-oriented approach. If you run a company that is mostly based on domestic business, consider shifting your focus and expanding to other countries. If your business already has an international presence, dedicate more time, energy and capital to raising your brand awareness in other parts of the world through marketing techniques, social media strategies and new overseas partners.
Look into hedging and forward contracts
British businesses that deal frequently in foreign currency and imports may want to take advantage of forward contracts in order to hedge the possibility of an even greater downturn in the value of the pound. This involves making an agreement with an overseas party to freeze the exchange rate for a given transaction. If the pound falls further than its current state, this contract could protect you from losing out on profits and keep you ahead of your competitors. If there is a constant use of FX, it’s important to keep foreign bank rates to minimise XR fluctuation exposure.
Source suppliers in the UK
In light of the weaker pound, importing supplies can be expensive and inefficient. Businesses that rely on supply chains should follow in the footsteps of the automotive industry and take advantage of other businesses within the UK, sourcing local suppliers instead. Using British suppliers saves time, cuts costs on transport and import duties and increases profit margins – and it also reduces the risk of any complications that could arise with foreign companies in the face of Brexit.
Essentially, benefiting from the UK’s unstable currency involves implementing protective measures while reaching out to new markets to appeal to overseas customers looking for a promising deal. For both of these endeavours, it is imperative to have a team of experts on your side to advise you on how to maximise your business’s profits – and that’s where DUA come in.
One of the things that sets our team apart from many accountants in London is our comprehensive service. We do so much more than keep your books; we can help restructure your business in response to the shifting economy, provide you with guidance on dealing in foreign currency and even aid in your company’s expansion into new markets. Get in touch with our team of experienced accountants in Watford today to learn more about how we can take your business to new heights, even as the economy remains volatile.
