SMEs shed £900m on money markets annually

Currency market fluctuations are costing small businesses £900 million in revenues every year, according to foreign exchange experts.

An investigation by World First has discovered that volatile currency markets this year brought on by wider economic instability have caught many small firms off guard.

Between 20 and 22 October, the pound lost 7% of its value, a drop which World First believes hit the small business sector hard.

Alex Sullivan, head of corporate foreign exchange at the company, said: "Companies have grown used to relatively stable currency markets and become rather too relaxed."

"The recent dramatic slump in the value of the pound against both euro and dollar means that otherwise profitable sales can become heavily loss-making."

He added that smaller firms needed to be smart when it came to doing business in foreign currencies during the present climate.

Last week, secretary of state for business Peter Mandelson vowed that the government would begin paying its smaller contractors on time.