As the current economic climate bites, many are now experiencing the realities of an unstable foreign exchange market where currencies have moved significantly.

The recent past has seen a u-turn in rates and for those importing from the US or from countries linked to the US dollar. This may have a major impact on margins, unless the rise can be passed on, which may be difficult in this economic climate. Businesses which export goods into the US dollar linked zones should think about revisiting those markets where they were not previously competitive.

Inevitably there will be winners and losers but reviewing all your business processes and establishing a FOREX policy will help to ensure you deliver what is expected and stay ahead. Here are some important steps:

• Ensure contracts contain a renegotiation clause if FOREX rates changing significantly.
• Consider hedging currency exposure by forward purchase or sale. There are many different options from specific back to back arrangements with your bank or the use of a rolling contract.
• If you regularly buy and sell in a currency, have a bank account in that currency.
• Consider the time frame to reorder (China circa 10-14 wks), test the anticipated new price levels and gauge the impact on sales and adjust quantities accordingly.
• Recalculate product, customer and market profitability at new effective price levels.
• Review any changes to prices by your competition; evaluate the impact on their and your profitability before making any adjustments.
• When reviewing selling prices, consider how price sensitive the product is.
• Look at moving to UK sourced product, it may now be more cost-effective and provide you with a new USP and no exchange risk.