Less than half of Scottish SMEs doing business abroad

The data from TransferWise for Business, gathered from a survey of SMEs across the UK about their experiences of expanding their business internationally, found Scottish businesses are missing out on the financial rewards from overseas trade.

Of the 60 per cent of UK SMEs that have done some form of business overseas - e.g. selling their product or service internationally, buying stock or materials overseas or hiring overseas freelancers – 76 per cent told the international money transfer platform for SMEs that it made them more profitable.

Seeking out a new customer base (74 per cent) and gaining access to materials and stock not available in the UK (33 per cent) were also cited by Scottish businesses as key reasons to internationalise. A third (34 per cent) say it gives them access to employees with essential skills.

Europe is a key trading partner for UK SMEs, with 71 per cent of the UK’s international SMEs having done business in Western Europe, and a third (33 per cent) in Eastern Europe.

A fifth (19 per cent) of all SMEs in Scotland rely on some form of business with Western Europe.

Nilan Peiris, VP Growth at TransferWise said: “SMEs make-up 99 per cent of all UK businesses - they’re the engine of the UK economy. Going global can be a solution to many of the problems UK SMEs face, from finding a new customer base to sourcing cheaper materials or finding key business skills less available in the UK.”

“It can be daunting for a small business to take the leap and go global, but our research proves that SMEs that do so are much more likely to be profitable and would encourage fellow UK SMEs to do the same.

While international SMEs have reported greater profitability, many are still being charged over the odds to make international payments when paying supplier invoices or freelancers.

Independent price comparison of the main UK banks and Western Union shows that the most popular banks and transfer providers charge their SME customers up to £97 to send £2,000 into euros. Because the traditional bank charging structure for international payments - an upfront fee plus a hidden exchange rate mark-up - is so untransparent, many SMEs will not even know they’ve been charged more than they thought.

Mr Peiris added: “One piece of advice I’d give to international SMEs is to make sure they know the true cost of sending money overseas. Businesses don’t have to put up with the unfavourable exchange rates and hidden costs that banks charge. TransferWise for Business is a new tool that allows SMEs to make international payments easier, faster and at a lower cost.”