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According to Mark O’Sullivan, a director
at foreign exchange specialist Currencies
MATTERS
Direct, small and medium-sized enterprises
(SMEs) often ignore the issue of currency,
How currency moves
even at a time when they are scrutinising
every other way of preserving margins.
can work in your favour
Fortunately, tools to mitigate currency
risk are becoming more widely available,
C
onstruction materials company O’Sullivan adds. Forward contracts allow
Everbuild has struggled to you to lock in a price when you know you
expand its export market over the are buying or selling in another currency on
past decade. But as the pound has plunged a set date in the future, while options are
against other major currencies over the more sophisticated and are effectively
course of the credit crunch (see chart), “insurance” against currency movements.
it can feel mechanical and clichéd but it has things have looked a lot brighter.
to get to the heart of what the expectations ‘We’re now selling in Holland, Germany,
are for this hire. What change are we trying France and Belgium,’ says MD David
‘In general, if banks are
to achieve?’ Seymour, who adds that Everbuild’s export offering a product, there’s
Some companies use psychometric tests sales are up 60 per cent to £5 million. ‘It’s
a margin in it for them’
when hiring at senior level, but as Maxted also given us a chance to recreate our
notes, these will only be effective up to a business in the Caribbean and the Far East,
point and certainly won’t reveal everything. where we had become uncompetitive.’ The downside of forwards is that you
For one thing, people react differently to Clearly, currency moves can cut both will be committed to going through with
such examinations of character. ways and it is dispiriting to think that the deal on the day or lose a hefty deposit.
export growth may rest on an unpredictable Options allow you not to follow through if
DEEPER ANALYSIS factor over which you have no control. the currency movement goes in your favour
Marshall admits to having learnt the hard Seymour is philosophical about this: ‘Once (hence the name), but as with all financial
way before honing the recruitment process we have established a customer base in a products, that flexibility comes at a price.
at The Marketing Store. country, there is every chance, even if we ‘Options are used all the time by big
‘The most important thing is getting the become not quite as competitive, that there corporates, and they’re just filtering down
team right as well as the job spec filled,’ will be residual demand for our products.’ to SMEs,’ says O’Sullivan.
he states. ‘It’s been my experience that the But many are still sceptical. Seymour says
cultural and chemistry issues have not he will pre-buy currency if he knows he is
THE FALLING POUND (JAN 2007 = 100)
always been the most important things, making a purchase in six months’ time and
but they need to be.’
110
vs. dollar
the exchange rate is favourable, but he
So if you’ve used the recession to eject
vs. euro
remains unconvinced of the benefits of
100
some of the dead wood in your business more complex financial offerings. ‘In
and you have an eye on hiring again, now
90
general, if banks are offering a product,
is the time to think about your needs. there’s a margin in it for them,’ he says.
80
‘There’s definitely talent out there,’ He does add one word of caution. ‘If
Marshall insists. ‘Good, highly skilled
70
you’re giving long credit terms to your
people aren’t sitting still; they’re moving customers, say 60 or 90 days, that’s when
60
for the same reasons they moved before you need to pre-sell or pre-pay the currency.
the recession. They want a new challenge J
an 07 J
ul 07
J
an 08 J
ul 08
J
an 09 J
ul 09
J
an 10
Otherwise an adverse move could wipe out
as they need to grow.’ ■ your margin completely.’ ■
30 BUSINESS XL
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