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SME insurers ‘missing untapped revenue streams’

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Australia’s small-and-medium enterprises (SMEs), including insurers, are losing out on sizable untapped revenue from cross-border trade due to poor confidence in managing exchange rates, a new survey finds.

A quarter of SMEs in finance and insurance surveyed believe cross-border trade and payments will increase in the coming six months, an online poll conducted in October by Sydney-based foreign exchange and international payments firm OFX Group finds.

The company, formerly OzForex, says compliance and uncertainty in international markets are the top two barriers preventing finance and insurance SMEs from expanding into cross-border trade.

The survey finds just over half were concerned with the rising cost of doing business over the next 12 months. Still, the financial and insurance services sector is the SME industry most positive towards the local economy over the next six months, with a fifth saying they are “very confident”.

By using forward exchange contracts, SMEs can secure a rate for up to 12 months in the future, providing certainty on foreign currency rates and shielding the business, its margin and bottom-line from any unfavourable market moves.

Used in combination with single transfers, businesses can safeguard margins and take advantage of any positive volatility that may arise, OFX says.

“Currency volatility creates both risks and opportunities,” it says. “Working with a currency expert can help SMEs manage uncertainty, grow their business and take advantage of cross-border opportunities.”