A "knowledge gap" about protecting businesses from currency fluctuations means British SMEs risk losing thousands of pounds on export deals, a new report has warned.
The study by American Express FX International Payments showed that despite belief in an "export-led recovery" being generally strong in the UK, 23 per cent of companies are actually looking to pull back on their international trade due to worries over volatile exchange rates and red tape.
Over half (56 per cent) of those who are losing confidence in exports cite the sharp fluctuations in the euro as their biggest concern.
American Express said the UK's top export markets - Germany, Spain and Poland - all use the euro and, without safeguards against the risk of currency volatility, the 55 per cent of SMEs that trade internationally could lose thousands.
It added that a company with an exposure of €300,000 over three months starting in October 2010 could have saved £19,745 if it had purchased an incoming forward contract rather than taking the spot price for the euro in January 2011.
However, despite the potential losses, 55 per cent of SMEs do not use such protection and 28 per cent have never even considered it.
American Express FX International Payments general manager, Rocco Magno, said, "After a tempestuous year for currencies, it's not surprising that currency fluctuations are the number one concern for SMEs trading internationally.
"Worryingly, these fluctuations are not only affecting confidence, but also the bottom line for SMEs due to a knowledge gap on how businesses can protect themselves from these fluctuations."
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