Tag Archive for: currency

5 Tips for Currency Exchange

07-10-2021| treasuryXL | XE |

If you’ve ever travelled abroad, sent a money transfer to family overseas, or made international business payments, you know it can be a pain to exchange currency. Searching banks, online exchange providers, or the streets of an unknown city for the best rates can be time-consuming and costly. And, if you don’t pay attention, foreign exchange costs can add up.

Here are five tips to help you save on currency exchange.

1. Plan Ahead

Find out what the current mid-market exchange rate is with our XE Currency Converter or XE Currency App. Next, compare the rates and fees offered by banks, exchange cambios, and online providers. Once you find the best deal, exchange your funds.

2. Understand Foreign Exchange Costs

Some foreign exchange costs can be transparent and others can be hidden, so it is important to understand what you are paying for. Just like every other company, foreign exchange providers need to make a profit to stay in business. The following are three ways in which providers make money:

  • Currency providers may charge a commission, flat fee, handling fee, or minimum charge
  • They may include a spread in exchange rates by buying currencies at one rate and selling them at another – with a margin included
  • FX providers may also charge transfer fees for wire transfers and other delivery methods

You can calculate your currency exchange costs with our XE Foreign Exchange Charges Calculator. Or, download the XE Currency app for iPhone and use our Rate Advisor to compare your provider’s price to the mid-market rate.

3. Consolidate your Transactions

Since every currency exchange transaction has associated costs, fewer transactions can sometimes result in lower costs. Depending on the type of transaction, you may save money by consolidating several money transfers into one large transaction. Some foreign exchange providers may even offer better rates, or waive commission fees for currency exchanges over a certain amount.

4. Beware of Counterfeits

Every country has its fair share of counterfeit currency – some more than others. To avoid fakes, try to become familiar with the look and feel of the currency. Take note of watermarks and other security features. This can make spotting a fake easier, although it probably won’t be possible to spot a high-level counterfeit. Try to use trusted foreign exchange providers and established currency exchange companies.

5. Bank Overseas for Extended Stays

If you’re moving abroad, studying internationally, or plan to stay in a foreign country for a long period of time, consider sending money and banking overseas. Opening up a local bank account can minimize fees and help keep your money secure. It also makes consolidating your currency transactions much easier and helps mitigate the risk of currency fluctuations.

 


#4 Having No Insight into the Variety of Products Available for your Company (Dutch item)

05-08-2021 | XE |

Many companies are not aware of the total range of possibilities for the management of Currency Risks. For example, they only buy the necessary currency at the current rate, spot rate, and think any other strategy currency speculation. Hedging in particular is often misunderstood and therefore rejected. currency hedging is not gambling how the currency markets might behave in the coming days and weeks development, but is intended to insure the company against the possibility of unfavorable developments.

“Valutahedging is niet gokken hoe de valutamarkten zich de komende dagen en weken zouden kunnen ontwikkelen, maar is bedoeld om het bedrijf te verzekeren tegen de mogelijkheid van ongunstige ontwikkelingen.”

Er zijn diverse valutahulpmiddelen die u kunt gebruiken om dat te doen, maar laten we termijncontracten eens als voorbeeld nemen. Met deze transacties spreekt u af om in de toekomst een bepaalde hoeveelheid valuta tegen een vaste prijs te kopen. Neem bijvoorbeeld een supermarktketen die over een maand €10.000 moet betalen aan buitenlandse leveranciers. Een termijncontract dat vandaag specificeert hoeveel pond de keten voor die €10.000 zal betalen, elimineert het risico dat het pond de komende weken in waarde daalt waardoor de supermarktketen meer zou moet betalen dan verwacht. Dat is geen valutaspeculatie of gokken hoe de markten zich gaan ontwikkelen, het is
een verzekeringspolis.

Achteraf kan natuurlijk blijken dat hedging niet nodig was geweest. Als in ons voorbeeld het pond niet daalt ten opzichte van de euro of misschien zelfs stijgt, kan de supermarktketen denken dat het onverstandig was om van tevoren een koers vast te leggen. Maar dan zouden ze hedging beschouwen als speculatie en niet als een verzekeringspolis. Zo heeft u er aan het eind van het jaar ook geen spijt van dat u een opstalverzekering hebt betaald terwijl uw huis niet is afgebrand. Dat wil niet zeggen dat hedging de juiste strategie is voor alle bedrijven. Sommige zullen van mening zijn dat hun valutarisico niet zo groot is dat het dit soort verzekering nodig heeft. Maar dan nog moet u er niet vanuit gaan dat uw valutaprovider niet meer kan doen om uw bedrijf te helpen met uw valutabehoeften.

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#3 Sole focus on Exchange Rates (Dutch item)

22-07-2021 | XE |

Companies that need a currency service, either for their daily transactions or for a more strategic planning for the future, will logically first go to the exchange rates offered. Why wouldn’t you choose the provider that offers the best possible rates for your money to begin with?

Het antwoord op die vraag is dat de koers weliswaar belangrijk is, maar niet de enige factor is die van invloed is op de blootstelling van uw bedrijf aan valutarisico’s. Bedrijven die alleen maar gefocust zijn op het volgen van de koersen, kunnen bovendien het grotere plaatje missen.
Als iets te goed lijkt om waar te zijn, dan is het dat meestal ook. Met andere woorden: als u een uitstekende koers krijgt aangeboden door een provider, is er dan iets anders wat u niet krijgt? Dat kan het serviceniveau zijn dat uw bedrijf nodig heeft, of de juiste ondersteuning. Hoe snel reageert uw provider bijvoorbeeld als een betaling fout loopt?

“Bedrijven die alleen maar gefocust zijn op het volgen van de koersen, kunnen het grotere plaatje missen.”

Het is ook belangrijk om te begrijpen dat koersvergelijkingen misleidend kunnen zijn. Valutamarkten zijn zo bewegelijk, dat u de koersen van een specifiek moment moet nemen om een correcte vergelijking te kunnen maken. Een provider die nu aantrekkelijk lijkt vergeleken met de koers die een van zijn concurrenten twee uur geleden bood, is misschien helemaal niet zo aantrekkelijk. Het is zeker zinvol om rond te kijken. Veel bedrijven accepteren de matige standaardservices van hun valutaprovider omdat ze nooit naar alternatieven hebben gekeken. Maar doe dat rondkijken op basis van waarde in plaats van prijs. Wat hebt u behalve concurrerende koersen nog meer nodig van uw valutaprovider? Zijn de aangeboden koersen open en transparant, zodat u altijd precies weet hoeveel u betaalt, na aftrek van kosten?

In de praktijk bieden valutaproviders een verscheidenheid aan meerwaarde. Misschien hebt u een online service nodig die is afgestemd op de specifieke eisen van uw bedrijf, met autorisatie van verschillende mensen voor verschillende soorten transacties. Misschien hebt u de snelst mogelijke service nodig zodat u langere betalingstermijnen hebt. Verder kunnen valutaproviders de valutamarkten voor u in de gaten houden. Als uw bedrijf zijn valutatransacties zo probeert te timen dat u de best mogelijke koers krijgt, ga dan op zoek naar een provider die koersmeldingen of marktorders biedt. Dan ontvangt u een melding wanneer de koers een bepaald niveau bereikt of wordt uw transactie automatisch verwerkt tegen die prijs.

 




 




 

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#2 No Policy for Currency Risk Management (Dutch item)

08-07-2021 | XE |

Nadat een bedrijf zijn potentiële valutarisico in kaart heeft gebracht, is de volgende stap het opstellen van een plan om dit risico te beheren. Met name grotere bedrijven zouden een risicobeheerbeleid moeten overwegen waarin wordt beschreven hoe het bedrijf valutarisico’s aanpakt. Daardoor krijgt u een doorlopend raamwerk om volatiliteit te beheren, zodat u niet steeds op ad-hocbasis hoeft te reageren.

De aard en de details van uw beleid hangen af van de omvang van het risico dat uw bedrijf loopt. Een bedrijf met een omzet van €1 miljoen zal zich natuurlijk veel meer zorgen maken over een potentieel netto valutarisico van €200.000 dan een bedrijf met hetzelfde risico maar met een omzet van € 10 miljoen. De context is hier dus van belang.

“De aard en de details van uw beleid hangen af van de omvang van het risico dat uw bedrijf loopt.”

Niettemin moet elk risicobeheersingsbeleid enkele basisprincipes omvatten. Zo moet er beschreven worden hoeveel valutarisico het bedrijf bereid is te nemen en over welke periode. Verder moet er worden aangegeven welke hulpmiddelen het bedrijf wil gebruiken om deze risico’s te verminderen. En er moet vastgelegd worden wie in het bedrijf gemachtigd is om beslissingen te nemen.

Het doel moet zijn om een degelijke procedure te ontwikkelen om het valutarisico permanent te beheren, in een vorm die gedeeld kan worden met een groep mensen in plaats van alle verantwoordelijkheid bij een enkele persoon te leggen. Dit moet een collectief en algemeen begrepen beleid zijn dat het bedrijf te allen tijde kan toepassen en dat niet wordt losgelaten als een sleutelpersoon ontslag neemt of ziek is.

“Veel bedrijven weten niet dat ze te maken hebben met een valutarisico. Als u zich in die positie bevindt, is de kans groter dat de impact van de volatiliteit van de valutamarkt op uw bedrijf een nare schok zal zijn.”

 

Uw beleid voor valutarisicobeheer moet ook regelmatig worden bijgewerkt, bijvoorbeeld ten minste eenmaal per jaar. Het is onvermijdelijk dat uw bedrijf in de loop van de tijd verandert en dat geldt ook voor het risico dat het loopt. Als u meer of minder zakendoet in bepaalde markten of als de vooruitzichten voor de valutamarkten veranderen, moet uw beleid daar op aangepast worden. Maar zorg ervoor dat u strategische planningsbeslissingen neemt en niet in de verleiding komt om tactisch te reageren op dagelijkse ontwikkelingen. Bedrijven die niet weten hoe ze risicobeheerbeleid moeten ontwikkelen of wat zo’n document moet bevatten, zouden hun opties moeten bespreken met een valutaspecialist.




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Going Cash-Free: Is it Right for You?

09-07-2020 | treasuryXL | XE |

Let’s try something. Reach out to your friends, family, or roommates and ask if anyone has $50 they could loan you. Did anyone have that much money on them? Or did they say that they needed to go to the bank, or ask if they could electronically transfer you the money?
In recent years, it’s become increasingly common for people to not carry cash around with them, or to just carry a little bit in the case of emergencies. While there are exceptions, the majority of consumers have moved to using their credit and debit cards and other forms of electronic, cashless payment.

At the end of 2019, 70% of consumers in a survey answered that they preferred card payments to cash, with 38% of card users citing inconvenience as the main reason they preferred cards to cash. And it’s not just consumers who are looking to go cashless. Corporations like Starbucks, Sweet-green, and even Amazon have all implemented cashless measures at their physical locations. Whether you’re tired of the inconvenience of cash, want to keep track of your transactions, or you’re worried about the possibility of your cash carrying germs, you may be considering taking your payments completely cashless. Let’s take a look at what that could mean for you going forward.

Why go cashless?

Many people around the world have enjoyed the benefits of transitioning away from cash and toward electronic payment methods. These are some of the most popular reasons for making the switch:

  • It’s convenient. No more lugging that heavy wallet around, and no more digging around trying to find the right bills. If you’re short on time and want a quick transaction, all you need to do is swipe a card.
  • It leaves a paper trail. Does anyone keep a record of every single time they pay with cash? When you pay electronically, on the other hand, you have a built-in record of everything you’ve purchased, when you purchased it, and how much it cost. If you’re trying to budget, this makes it easier for you to see exactly how much you’re spending and where your money’s going. Or if your balance is lower than you expected, you’ll be able to see where the money went—or if your account information has been compromised.
  • Some cards come with benefits.From discounts to rewards, cash-back points, airline miles, and more, using your card frequently now could bring you a lot of benefits in the future.

Why you might want to keep a little cash

Even as technology continues to advance, it’s not likely that cash is going anywhere anytime soon. 88% of surveyed consumers stated that they still use cash sometimes, and here’s why:

  • Data security and privacy are a concern. With technological advancement comes new data security worries, and the world of payments is not an exception. E-commerce sites can be breached, and card information can be stolen. Or, after buying online, you might start seeing targeted advertisements based on your purchase and search history.
  • Cashless payment isn’t always a guarantee. Some vendors (particularly smaller, local businesses) only take cash. Or if they accept card payments, they might have a required minimum or add a small additional service fee to the transaction. Or maybe a store or restaurant’s card reader could go down for the day, and you’ll need to find an ATM. It might be small now, but these fees can quickly add up—and your card might end up being more of an inconvenience in these establishments.
  • You could spend more! When you have cash in your wallet, it’s easy to keep track of how much you have left, and how much you’ve spent. When all you need to do is swipe your card, it can be easy to lose track of what you’ve purchased and what’s left in your account.

Could my cash be contaminated?

In the wake of the global COVID-19 pandemic, this has been a question on everyone’s minds. Can cash carry the virus? Which payment method is the least likely to put you at risk of cross-contamination?

You’ve been told to try to avoid coming into contact with high-touch surfaces (such as door handles, handrails, and tables). Since cash frequently changes hands, you might be worried about the chances of your money carrying some harmful germs.

It’s true: coins and bills can potentially carry viruses, bacteria, and other pathogens. It’s not the most common method of transmission, but it can potentially happen. If it gives you peace of mind and makes you feel less anxious about the possibility of cross-contamination, prioritize electronic payment and card payments, since your credit and debit cards can be wiped down. If you do need to handle cash, wear gloves if possible, and always wash your hands after coming into contact with new, potentially infectious objects.

In conclusion…

From buying a house to transferring money overseas, there are a few situations where paying with cash obviously isn’t the best move. If you enjoy the convenience of electronic payments and want to make the transition into a completely cashless lifestyle, you’re not the only one ready to make the switch. As long as you know what works for your purchases and your lifestyle, there’s no reason not to explore alternate methods of payment.

Source

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multi billion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

Overwhelmed by FX Administration? Your Provider Can Help With That

02-07-2020 | treasuryXL | XE |

Foreign exchange isn’t always about the big trades. For many organizations that deal with international currencies, they find that their FX needs start small. It may not seem like it, but your routine, day-to-day operations could be a larger FX risk exposure than you think.

Whether your ordinary operations are taking up time and resources that could—and should—be devoted to other matters or your current processes aren’t as efficient as they could be, one important step to managing your organization’s FX risk is taking a look at how your organization is handling transactions.

If you feel that you’re having trouble handling your transaction volume or you’re not handling your international payments as well as you could be, don’t worry: this is where your FX provider can help you out.

What can go wrong with day-to-day transactions?

Depending on how many your business makes each day, these typical, everyday operations could be taking up a large portion of your business’s time and resources. This time and resources could be more valuably spent elsewhere. Assess your operations and think carefully—are there any areas of your business that you think you’re neglecting because of how much time you need to devote to minute transactions? Are you missing out on the bigger picture because you’re too focused on the small things? When you assess your foreign exchange risk exposures, remember to consider everyday operations as well as the larger scope.

In addition, elaborate, inconvenient processes could end up causing trouble for your business. If, for example, you rely on employees to take care of manual data entry or transactions, there’s always the chance that human error could cause some unnecessary delays, or worse.

This is a common problem for fast-growing SMEs. Founders and owners want to monitor international payments and ensure that everything is being taken care of according to their standards, but they don’t have the time to monitor and physically process everything the way they’d like to.

Who should you turn to in order to ensure that your payments are being taken care of in a way that is efficient but still effective and up to your standards? This is where your FX provider comes in.

How can your foreign exchange provider help?

As we’ve said before, your foreign exchange provider does much more than help you find the best exchange rates. FX providers offer a wide range of products and services to assist their clients with their overseas payments, and one of these services is processing (or even automating) payments.

For example, your provider may be able to create a system that grants some users administrator rights to do the processing work while reserving payment authority for specific individuals. They can also offer secure, reliable, and straightforward processing, and they should be able to help you trace delayed payments. Depending on the volume and nature of your payments, they may also be able to help you automate them, or at least vastly cut down on the amount of time and resources it takes to make a transaction.

Finding the right solutions can take time, and it starts with the right FX provider. If your current provider doesn’t offer these solutions, or you haven’t found theirs to be as effective as you’d like, it’s important to shop around until you can find the provider that can help you to manage the administrative side of your transactions while maintaining the right level of quality and security.

At XE, they provide a broad range of currency services and products to businesses around the world. XE experts will work with you to ensure that your foreign exchange procedures are the right ones for your business and its needs.

 

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multibillion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

How Can Your Business Address FX Risk?

25-06-2020 | treasuryXL | XE |

Last week, we encouraged businesses like yours to look beyond currency exchange rates when developing your foreign exchange risk management procedures. This week, we want to take that discussion a little further: what else is out there for businesses looking to improve their FX risk management? One common misconception is assuming that FX risk management is more narrow than it is. That is to say, many businesses might think that any FX strategy beyond purchasing the required currencies at the current spot rates would be currency market speculation. The truth is, there is a wide range of foreign exchange tools for businesses to reduce their risk exposures and improve their operations.

What about hedging?

Of all of the FX strategies and tools, hedging may be the most widely misunderstood. It’s a common misconception that currency hedging serves to second-guess how foreign exchange markets could potentially move in the coming days and weeks, but that’s not its. In FX risk management, hedging is a valuable tool to help insure the business against possible unfavorable movements caused by market volatility. It’s one aspect of a comprehensive FX risk management plan, not the entire strategy.

Like any other strategy, the importance of hedging for your business depends on your business and its exposures. Depending on your FX risk exposures, your organization may not need to make hedging a central part of its risk management plans. Your FX risk management strategies shouldn’t be based on a generalized idea of currency risk; they need to fit your organization’s unique risk profile.

What other products are available?

In short, this will depend on the FX provider. When researching FX providers, don’t just ask them about the rates they offer or what kind of advice they can provide on hedging strategies. Take some time to read up on the full suite of products and services they offer, and consider whether they would be valuable for your business both in the day-to-day and in the long-term.

At Xe, a number of products and services are offered to businesses to aid in their international payments as well as their FX risk, available as a standalone or API. Some of our products include:

Don’t go too far—in the coming weeks, we’ll be taking a closer look at our business offerings and the benefits they could bring to your operation.

Source

 

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multibillion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

FX Risk: It’s Not Just About the Exchange Rates

18-06-2020 | treasuryXL | XE |

Let’s face it: for individuals and businesses alike, exchange rates are one of the most important factors of international money transfer. Having a favorable exchange rate can make a significant difference in how much money you need to provide in your payments, and knowing that you’ll always get a good rate can make a difference in your day-to-day transactions as well as your long-term strategic planning.

However, in the world of FX and FX risk management, one common mistake we see is businesses solely looking at the rates they can get from their FX providers, and failing to look past the rate to other determining factors. But what are these factors, and what should businesses really be looking for in their FX providers?

Why shouldn’t you only look at the rates?

To clarify: we aren’t saying that you shouldn’t look at the rates offered by potential providers. They just aren’t the only thing that will affect your business’s exposure to currency risk.

FX providers don’t just help you make currency exchanges. They offer a wide range of other products and services to help organizations manage their international payments as well as manage their FX risk, and having a narrow focus on the exchange rates can prevent you from seeing the bigger picture and understanding how the FX provider can help your business as a whole.

Think about all of the ways in which your business engages with international currencies, and look at all of your potential FX risk exposures. They don’t all have to do with the exchange rates, right? The right provider for your organization will have product offerings that address your organization’s specific needs.

It’s also important to assess potential providers with a discerning eye, and with the mantra, “If something seems too good to be true, it probably is.” If a provider offers fantastic rates that noticeably stand out from the rates offered by the competition, carefully consider why that might be. Are they able to offer these fantastic rates at the cost of offering other essential products and services to their clients? Don’t be afraid to ask the detailed questions.

Rate comparisons can also be misleading. The foreign exchange markets are constantly moving, and it’s not uncommon for the rates to change multiple times per day. Unless you’re comparing rates at one precise moment, it’s possible that you don’t have a completely accurate comparison between the two. A rate that looks stronger now might not be that way in a few hours.

As a final note, keep in mind that one service that many foreign exchange providers offer is watching the rates for you. If there is a particular rate that your business wants for its transactions, look into providers with a “rate alert” option so you won’t spend all of your time being preoccupied by checking for the best rate.

What else should you look for?

So now that we’ve established that rates aren’t the only offering you should look for, you’re probably wondering what else you should be looking for. Ultimately, that depends on your foreign exchange risk and what your business is looking for.

Once you’ve created your FX risk management policy, consider what your organization can’t do alone. That’s where your foreign exchange provider can help you. Some of the features you might want to look for include:

  • Specialized services for your sector or business operations
  • Support services to aid when something goes wrong
  • Comprehensive online services that can be accessed anywhere, any time of day
  • Transparency and clear communication
  • Services that can simplify complex business processes
  • Fast transaction speeds

Don’t be afraid to shop around for the right foreign exchange provider. If you want the best solutions for your business, it might take some time before you find the provider that has the expertise and products to address your risks.

Source

 

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multibillion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

Do You Know Your Business’s Foreign Exchange Risks?

11-06-2020 | treasuryXL | XE |

Every business that deals with international currency has foreign exchange risk, but every organization will face a different set of issues and risk factors, depending on their operations.

The first step to building a strong FX risk management program and reducing your organization’s foreign exchange risk is knowing:

  • What your exposures are,
  • Where they come from, and
  • How they can impact your business.

Many businesses around the world drastically underestimate their foreign exchange risk level, and are unaware of many of their greatest exposures. In this next installment of our series on FX risk management for businesses, we want to take you through the steps of assessing and determining your business’s foreign exchange risks. From there, you’ll be primed to take the next step of formulating your risk management strategy.

Where does foreign exchange risk come from?

There are many ways currency market exposure and foreign exchange risk can present themselves to your organization.

Some of the most common causes of foreign exchange risk include:

  • Importing. Does your business import any products or materials from overseas? If fluctuations in the market cause the value of your country’s currency to drop, then your organization’s importing costs could see a drastic increase.
  • Exporting. On the other hand, if your business sells goods and services to other countries, think about what market volatility could do for your prices. If your country’s currency increases in value, your business might not be as competitive in your market.
  • Balance sheet risk. If your organization has any subsidiaries or entities overseas that take care of some day-to-day operations, the value of their operations could change when the currency exchange rates do.

These are just a few examples of common causes of foreign exchange risk. Your business’s specific foreign exchange risk exposures will depend on what you do in your day-to-day operations and how you handle international currencies.

How do you know if your business has foreign exchange risk?

Identifying potential sources of risk is the first step. Once you’ve examined how your business deals with international currencies and whether your operations have any risk factors, you’ll need to assess the size of the risk and its potential impact.

There are three areas you’ll want to focus on:

  • Potential volatility. The markets are constantly moving, but global exchange rates can only move so far. Consider what could realistically happen and how that would affect your business, in order to get a better idea of your true exposure.
  • Net impact. Volatility could have a negative effect on your business, but your business could also see an increase in revenue from certain market fluctuations. Don’t just consider one element of the risk: look at the bigger picture.
  • Time. How far ahead have you planned? And on the other hand, how far ahead can you realistically plan while still making accurate, useful assessments?

How can you combat foreign exchange risk?

If some of these questions are making you feel overwhelmed, don’t worry. You’re not the only one who feels this way. Many businesses of all sizes around the world have found that they don’t have the expertise, time, or resources to fully assess their currency risk exposure and create a comprehensive risk management strategy that can fully address their risk profile.

A foreign exchange specialist can give your organization the expert guidance that it needs to create a plan to combat your foreign exchange risk and minimize the impact of market motion. At Xe, we’ve spent more than 25 years in the global currency markets. We understand foreign exchange risk, and we want to help you and your business do the same.

Over 13,000 businesses each year lean on us for expert guidance and support in assessing and combating foreign exchange risk. Are you ready to manage your risk Visit our Business page for more information about our offerings and to take the first steps in enhancing your organization’s foreign exchange risk management.

 

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multibillion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

 

Source

How to Build a FX Risk Management Policy for Your Business

04-06-2020 | treasuryXL | XE |

If you’ve been keeping up with our blog over the past few weeks, then you should be all caught up on foreign exchange risk. You know that your organization likely has some degree of FX risk, that you should make it a priority to assess your risk level and exposures, and that foregoing FX risk management is one of the most costly mistakes your business could make.

This brings us to our next point: crafting a foreign exchange risk management policy. Having a policy in place is one of the most important steps your organization can take to address foreign exchange risk and volatility in the global currency markets. But if you don’t have a policy in place, or you don’t think your current policy addresses the full scope of your organization’s FX risk, it’s time for an upgrade.

Not sure what to do or where to start? Let us take you through the steps of developing your organization’s foreign exchange risk management policy.

Why do you need a foreign exchange risk management policy?

Here’s the simple answer. If your organization doesn’t have a policy in place to deal with foreign exchange risk, you’ll only be able to respond to situations after they’ve already happened. Instead of acting to reduce your FX risk exposure, you’ll only be able to react to damage that’s already been done.

The markets are constantly moving, and volatility can have a real impact on your business’s bottom line without any warning. Without an FX risk management plan, you’ll only be able to jump into action once the damage has been done, and some of your initial response time will likely be taken up by strategizing over how to properly respond. In that time, the impacts to your business could easily increase.

A comprehensive FX risk management plan will not only give your organization a plan to jump into action in the event that market volatility has an impact on your business, but will also include long-term, ongoing measures to manage currency risk in your business’s day-to-day operations, even in times of muted volatility. By taking steps to reduce your risk exposures now, you can minimize the effects of volatility in the future.

What should your policy cover?

There’s no singular answer to this question, because there’s no such thing as a one-size-fits-all foreign exchange risk management policy. Every policy is different, because an effective policy will address your organization’s FX risks, based on your day-to-day operations and exposures.

There are, however, a few basic elements that every policy should make a point to include.

  • How much foreign exchange risk your business can handle, and over what time periods.
  • The tools your company will use to mitigate said risks.
  • Who in the business is authorized to make decisions about FX risk.
  • A robust process to manage currency risk on an ongoing basis (rather than ad hoc reactions).
  • Long-term strategic planning decisions (as opposed to just day-by-day developments).
  • Measures and action items that can be shared with a group of people, so FX risk management does not fall solely on one key person.

Once the policy has been created, it’s also important that you have a process in place to share it with the company at large, in order for the company to be able to apply risk reduction measures at all times (even if a key decision-maker is out sick or leaves the company).

How often should you update your policy?

At the very least, you should revisit your FX risk management plans once a year. But it might not be a bad idea to reassess more frequently, particularly if your business undergoes changes that could impact its foreign exchange risk.

The following changes would be good opportunities to readjust your FX risk management strategy:

  • An increase or decrease in exposure to particular overseas markets
  • Exposure to new overseas markets or currencies
  • Changes in the outlook for relevant currency markets.

How to get started

If you aren’t sure how to create or develop a risk management policy, we encourage you to discuss this with a foreign exchange specialist. A knowledgeable specialist can assess your FX risk, discuss your options, and help you to formulate the risk management policy that your organization needs for its specific risk profile.

For over 25 years, Xe has been a knowledgeable authority in the global currency markets. They understand foreign exchange risk, they help over 13,000 businesses each year with their foreign exchange and risk management needs.

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multibillion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

 

Source