Currency volatility costs internationally trading UK SMEs £71,600

Currency volatility has cost internationally trading UK SMEs an average of £71,600 over the past year, as geopolitical tensions and changing global trade conditions put increasing pressure on cashflow and margins.

New research from Bibby Financial Services (BFS) found that more than two-thirds (69%) of SMEs trading internationally have experienced increased cashflow pressure over the past 12 months.

Its annual Trading Places report points to currency fluctuations, the Iran War and US trade tariffs among the factors creating greater uncertainty for UK businesses operating overseas.

The research also found that cashflow challenges are being compounded by customer payment problems. Almost three in ten (29%) SMEs reported late payments from overseas customers, while 26% said they had experienced an increase in international customer insolvencies during the past year.

The potential consequences are significant, with 70% of respondents saying their business would be at moderate or significant risk of entering administration if geopolitical tensions continue.

Theo Chatha, CFO & Managing Director of Specialist Finance at Bibby Financial Services, said: “Unpredictable international trading conditions are stifling small businesses’ ability to grow and survive.

“Vast sums are being lost to volatile conditions, whether through currency fluctuation or more directly via the rising costs and disruption caused by the Iran War and US trade tariffs.”

Chatha called on the UK Government to strengthen trading relationships with the EU and take measures to reduce trade friction, arguing that continued uncertainty risks putting more businesses under financial pressure.

Despite the scale of potential currency exposure, BFS identified a gap between SMEs’ confidence in understanding foreign exchange risks and the measures they have in place to manage them.

While 84% of respondents said they were confident their business understood its FX risks, 43% have no proactive FX strategy.

Almost half (49%) also said nobody within their organisation had significant experience or training in managing foreign exchange exposure.

Chatha added: “A non-proactive approach to managing currency only puts businesses’ margins in the firing line.

“The businesses best placed to win amid this volatile trading environment are those with a strong FX strategy, allowing them to plan, hedge and budget with confidence – mitigating currency fluctuation and enabling growth.”

The Trading Places study is based on research among more than 500 UK SME owners and decision-makers operating across manufacturing, construction, wholesale, transport, retail and services. The research was conducted by Critical Research between April 29 and May 12, 2026.