(26 May 2025) East & Partners analyst meeting insights shares “on the ground” insights from the intersection of new product and service development for FIs and behavioural trends for the “voice of the treasurer”.
Evolving FX Risk Management Trends – Small Businesses Step Up
As the ongoing shift away from FX Options to Forward FX for hedging currency risk gathers pace, are small businesses who traditionally approached FX risk management with a degree of ambivalence given their largely import-only trade profile beginning to take matters into their own hands?
Matching their counterparts in New Zealand who display a high level of usage for Forward FX, Australian SMEs (annual business turnover of A$5-20m) usage of Forward FX has increased almost four times in the last ten years from less than 1 in 10 regular users to over 1 in 3. Infrequent users have accelerated from 12 percent to 36 percent. In 2015 almost 8 in 10 SMEs never used Forward FX but fast forward to 2025 and less than 1 in 3 SMEs never use the instrument for hedging their FX exposure. Does this herald a long overdue lift in export participation among small businesses targeted by organisations such as EFA?
This step change in FX hedging activity will soon result in individual relationship share by bank being reported for the first time for the SME segment, matching corresponding analytics for Lower Commercial and Upper Commercial Forward FX and FX Options primary and secondary relationship share based on direct interviews with 2,584 importers and exporters with an active FX need across Australia.
How Are Corporates Recalibrating Supply Chains in Response to the Trump Tariff War?
East & Partners long running Trade & Supply Chain Finance reporting highlights emerging trends in working capital management and strategic treasury planning market wide among SMEs, Commercials and Corporates. Valuable historical trends reveal how corporates have responded to liquidity and logistics challenges over the last two decades, however this current supply shock has no precedent, not since the 1930s anyway, bringing leading trade relationship managers to the fore to provide much need guidance and advice.
With scaled up China + 1 plans rocked by Liberation Day tariffs and escalation in the simmering US-China trade war, how are CFOs and treasurers grappling with rising uncertainty as the three month ‘truce’ between US and China does not signal a cessation in hostilities in the longer term according to importers and exporters reeling from crippling uncertainty.
Detailed in the latest round of reporting delivered to client this month, average current SCF facilities are forecast to expand strongly by 40 percent in the next year. Is demand uniform by sector vertical? The Australian manufacturing sector is the most “open” to international trade with 7 in 10 actively importing or exporting (71 percent). This figure rises to 82 percent in Singapore and as high as 85 percent in Hong Kong. In contrast under 57 percent of enterprises in the transport sector exhibit an active need for trade and supply chain finance, close to 50 percent in Singapore and Hong Kong.
East queried Australian SMEs on their experience as part of a supply chain financing arrangement with a large corporate buyer to gauge sentiment on their participation on these engagements. Of the proportion of SMEs engaged as part of an active SCF arrangement with a large buyer, 4 in 10 declare their experience is mainly positive, specifically the opportunity to gain access to a reliable revenue stream.
1 in 4 are neutral, finding there are no discernible differences with standard buyer terms incorporating traditional trade finance methods such as Letters of Credit (LCs) or Documentary Bills for Collections (DCs). Very few SMEs were characterized by a negative view resulting from an over reliance on a single major buyer with many unable to form a coherent view yet because it is too early to tell.
While each enterprise’s approach to the challenge is unique, some key elements are common to most strategies as highlighted by MIT Sloan Management Review which outlines what companies should do to respond directly.
Private Credit Barometer – Even Australia’s Biggest Companies Turning to Private Credit
Exclusive research suggests top corporates, not just SMEs and commercial real estate (CRE), are seeking private credit funding instead of traditional bank loans. Capital Brief and East & Partners have launched an exclusive, ongoing research series creating a barometer for Private Credit and M&A activities across corporate Australia based on direct interviews with 95 CFOs and treasurers of the Top 100 revenue ranked corporates.
The research, available exclusively to Capital Brief subscribers, found a more than 40 percent increase in interest in the asset class among the Top 100 Australian companies ranked by revenue. The research will be published quarterly drawn from East’s four decades of research into the complex and dynamic B2B financial services and banking markets.
“Corporates see the arrival and proliferation of private credit as a positive development, displaying remarkably strong sentiment regardless of their existing debt capital funding arrangements and future dated plans” said East & Partners Global Head of Markets Analysis, Martin Smith.
“Private credit is increasingly the go to for smaller companies the banks find too risky or complex but now, in exclusive new research Capital Brief is doing with East & Partners we find the big end of town is starting to come in. Macquarie Group called it out in its result last week and NAB CEO Andrew Irvine describes private credit funds as “frenemies”. Insightful new data in this opaque field from our new Private Credit Barometer” stated Capital Brief Associate Editor, Financial Services, Andrew Cornell.
“Our partnership with East & Partners takes Capital Brief forward into bespoke research explicitly designed around the interests of our subscribers. It’s an excellent match between East’s tested research and Capital Brief’s commitment to distinctive, valuable journalism” said Capital Brief Editor in Chief, John McDuling.
April Analyst Meeting Insights
The previous April 2025 analyst meeting insights delved into supply chain finance demand, cross border payment innovation and private credit.
East & Partners’ Outlook 2024/25 uncovers how corporates, middle market enterprises and small businesses are responding to changes in the global economy, from new technology to emerging trends for business banking. Download now.
Tap into Treasurers Decision Making Processes
All of these complex, difficult to quantify questions are accessible from the next round of East on Demand.
Going to field at the end of each month, East’s bank and financial institution clients are directly asking CFOs and treasurers any question, in any market with a rapid turnaround on voice of the customer insights within two weeks.
Clients utilise the platform for quickfire thought leadership and marketing campaign proof points and support, product & service development/defining a new business case driving sales pipelines, forecast customer needs and much, much more.