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Managing financial risk with hedging, and use of foreign exchange fluctuations to mitigate likely losses when trading abroad.
If you’re in business, then you are involved risk management. An often overlooked area of risk management is the skill of managing your supplier payments when purchasing other currencies.
Most CEO’s, Finance directors, or MD’s simply pick the phone up and call their bank for a spot price on a currency exchange rate and make one comparison. Inevitably, they choose their own bank for one of the following reasons,
- It’s faster
- They quoted a cheaper rate
- They could book the currency conversion over the phone
However, some Finance Directors who use us already have benefited in fiscal savings and time.
ALL of the above can be performed better by a currency conversion specialist, and the Client / Company can make considerable savings.
It’s faster:
Well, it isn’t really. Once cleared funds are in our account, we make the exchange and send the currency straight out, unless we have instructions to the contrary.
They quoted a cheaper rate:
Of course they did! If you just ring for a rate, most banks will quote the “Inter-bank” rate until you ask them to specifically quote you. This leaves you with the impression that you can buy, or sell, at the rate they quote. No-one can buy at that rate. When you call them back to deal at that rate, they will tell you the ACTUAL rate you can deal at which could be significantly different.
Banks will charge for the overseas money transfer. In most cases, we don’t
Banks charge a commission. We don’t.
They could book the currency conversion over the phone:
So do we! Once you have registered online, you will be given a client number and security information. You can call our head office and book your currency over the phone, no paperwork.
How we can help
Our Corporate team will provide suggestions to mitigate your Company’s risk when exposed to fluctuations in currency exchange rates.
Here are some ways that we can help to mitigate your financial risk when trading overseas:
Spot Contracts:
This is simply a contract to buy, or sell, currency at a rate of exchange that is fixed at that moment, and is for delivery in two working days’ time.
Forward Currency Contracts:
A “Forward” allows you to fix the exchange rate and make a currency exchange payment, or receipt, at some given point in the future. This is ideal for importers and exporters as this allows them to fix the price of their goods and know a fixed margin that they can sell their goods at.
More on Forward Currency Contracts..
Forward Currency Contracts plus Accruals:
Known as a “Forward plus”. It’s a subtle alternative to a “Forward”. It allows you to drip-feed the currency exchange.
Ideal if you have good cash flow and wish to take advantage of a great rate of exchange. This is perfect for overseas payroll payments.
More on Forward Currency Contracts plus Accruals..
Contact fx-foreignexchange for more information on how we can help. Our advice is free of charge.
Other articles on currency exchange services for businesses.
