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How can businesses protect their bottom line against the currency markets?
28-01-2021 | treasuryXL | XE |
Does your company have an exposure to foreign currencies? Wybe Schutte explains in below interview how business can tackle the complexity of FX.
AN INTRODUCTION TO
Wybe Schutte is head of Business Development Europe at XE.com. Wybe’s career has always centered around international business development and managing relationships. Within XE.com both play an important part as globally we XE is the trusted partner of many business in helping them manage & mitigate the risk that is associated with dealing with multiple currencies, be this through simple rate regulation or looking at high level currency risk management & hedging solutions.
We asked him 10 questions. Let’s go!
INTERVIEW
1. Can you tell something about XE and its mission?
At Xe, we live currencies. Most people know Xe from the currency converter, however we also provide international money transfer services for business for over 25 years. Xe’s Business Solutions supports company’s that have an exposure to foreign currency, supporting them to safeguard profit margins and improve cashflow through quantifying the FX risk they face and implementing strategies to mitigate it. So that our clients can focus on their core business and do not have to worry about their FX.
2.What kind of FX risk types exists and how does XE deal with it?
We look within each business to see where the currency risks are, and whether these can be offset. For example, any sales made in Euros could be offset against Euro costs. If there is still an exposure this is where products such as Forward Contracts can be considered in order to provide protection against the risk. Currency risk can be divided into three types: Transactional Risk, when a business deals in a country that differs to their base currency; Transnational Risk, when a business has an asset or liability overseas on their balance sheet, and Economic Risk where a movement in the exchange rate can give a business a competitive advantage when competing for a particular market.
3. How can you measure the different types of FX risk?
FX Risk can either have a negative or positive impact on a business’ bottom line. If you look back over the last 10 years you can understand what the potential impact could be in the most extreme, least extreme and average scenarios over your given timeline.
This can be done by looking at the high & low points of the market and a business’ FX exposure. This step helps companies to understand what the impact of the net exposure can have on the bottom line.
4. What are the most common critical FX problems that businesses have?
Businesses that have a transactional exposure to the currency markets can differentiate between committed and forecasted exposures. A committed exposure is when the price for a good or service in a foreign currency is known and contracted. Therefore, any movement in exchange rate has a direct impact on their profit or cost unless hedged. A forecasted exposure is when a business looks to the period beyond the committed period to see what their requirements may be. Confidence levels into forecasted periods can vary largely and it is normally the case that the further out a business forecasts, the lower the confidence levels.
5. How can businesses protect their bottom line against the currency markets?
There are a number of key stages that a business can look to follow in order to mitigate FX volatility. Firstly, Identify the type of risk, quantify the risk elements, and then look to build a strategy and agree the implementation process. These stages will allow you to decide the products that are most suitable, so you can then move to market timing and execution. Lastly, you should look to review, revise and adjust your approach on a regular basis. It is important to remember that it is not about market speculation but about mitigating your risk.
6. What is, in your perception, the biggest benefit of a working Foreign Exchange strategy?
Given the ever-uncertain world in which we currently live in, finance departments and treasury centres could be looking to build a strategy to deal with currency fluctuations, which over time could have a considerable impact on your company’s bottom line. A structured approach to foreign exchange risk can enable your business to make strategic planning decisions, rather than attempting to respond to day-to-day developments in the market.
7. Do you experience differences in FX before COVID19 and the time we live in now? What are the differences?
There has been significant movements in the currency markets during the Covid19 period and there are still many factors that influence the daily rates. During these uncertain times our clients are looking for certainty and stability. And although price is always important, other key factors like security and credibility became more important. Naturally each of our clients has been impacted very differently and we have worked with them to provide the solutions and flexibility they needed. We have welcomed many new clients from new geographies? as they were growing, and we supported existing clients that were growing or adapting their business models to suit the changing market.
8. The market is always changing, how does XE stay top of mind of the latest developments in the currency world?
We work closely with our clients to continuously understand their needs and adjust accordingly. Our expert Dealers keep a close eye out on the market. Understanding the movements, resistance levels, and key economic & political updates that can influence the market so that our clients do not have to worry about that. Xe also works closely with our sister companies and parent company Euronet Worldwide.
9. How does the future of FX look like in your perspective?
The near future could be set to weather extraordinary levels of balance sheet expansion and recession, potentially leading to a longer stimulative/expansionary monetary policy which could in turn depress currency rates of the countries that bear them. Near to medium term impacts of this could include a lack of major economic expansion as capital returns are often negative when factoring inflation. This may mean that we see a re-composition of FX strength toward commodity-based currencies (CAD/AUD/NZD) and alternative safe havens (CHF). However, we could see this shift in the longer term as public debt, in particular, becomes more tenable and attractive at such low interest rates and could invite broader investment for countries and to a degree private industry.
We have witnessed ample FX market volatility from an increased reliance on a more narrow data core. Inflation and interest rates and also public debt and balance sheet expansion narratives are having the most impact on rate movements. With this in mind; where much of the corrective forces required are formed around policies related to these key issues, it appears that volatility could behere to stay for at least the coming 6-12 months and beyond.
10. What has been your best experience ever in the world of currencies?
Supporting a scale-up with their complex FX requirements and enable them to grow their business in a short period of time by eliminating the FX risk and provide significant costs savings along the way.
About XE
At XE, they live currencies. XE provides a comprehensive range of currency services and products, including their Currency Converter, Market Analysis, Currency Data API and quick, easy, secure Money Transfers for individuals and businesses. They leverage technology to deliver these services through their website, mobile apps and over the phone.
Last year, XE helped nearly 300 million people access information about the currencies that matter to them and over 350,000 people used XE to send money overseas. Thousands of businesses relied on XE for information about the currency markets, advice on managing their foreign exchange risk or trusted XE with their business-critical international payments.
International Payments & FX Risk management for business
XE Business Solutions can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. We provide a comprehensive range of currency services and products to help you access competitive rates with greater control.
At XE, they share the belief that behind every currency exchange, query or transaction is a person or business trying to accomplish something important, so XE works together to develop new and better currency services that put their customers first.
XE is proud to be part of Euronet Worldwide (Nasdaq: EEFT), a global leader in processing secure electronic financial transactions. XE is part of the Money Transfer Division of Euronet and is the unification of HiFX and XE.com.
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Crisis Management: Why Treasury & Finance are pivotal to recovery
| 26-01-2021 | treasuryXL | Nomentia |
Initiating a crisis management strategy is now top priority for people, businesses and Governments alike. Utilizing and developing survival capabilities is proving challenging for many organisations, including cash flow forecasting and managing risk around major supply chain disruptions.
Diligent Cash Management and scenario analysis are both integral to managing uncertainty during the current crisis but also positioning finance and treasury leaders as pivotal to driving successful recovery planning.
Top things businesses should be concentrating on during the current crisis
Most organisations have a real need to understand what their current liquidity is: today, tomorrow and into the future. Finance and treasury must continue to run the business as best as they can but, to do this effectively, they need to know how much cash they have to work with on a daily basis. Therefore, group-wide, real-time cash visibility and future cash forecasting are crucial – if you don’t have enough liquidity in the business then trouble could be looming on the horizon.
The first step is to figure out what the real cash picture looks like, identify gaps and put the necessary measures and contingencies in place to avoid nasty surprises. Bill payment periods may have to be extended, funding requirements and arrangements revisited, hedging policies re-worked etc but the big picture i.e. cash visibility, is critical.
Cash forecasting comes next in order of priority, gathering a full and concise picture of short-term cash availability is imperative. Maximising business agility with some ‘what if’ scenario modelling may be required, for example: what happens if we don’t get paid a percentage of what we are expecting, what fall back positions do we have on government grants, loan agreements etc. Again, the key driver is knowing your current cash picture now and today, allowing you the best possible position for making strategic, next-step decisions. And the situation is real, a Guardian report, on the 2nd April, states 6 out 10 (60%) UK firms have no more than 3 months of cash left!
Many companies are struggling with cash forecasting, they simply don’t have adequate tools in place. What can they do, right now, given the logistics of remote working?
Thankfully there’s a lot they can do, and quickly. Ensuring whatever systems they have in place for managing liquidity are as automated as possible to enable real time, up to date information access on cash visibility. If automation is a problem or the company is still using traditional manual processes, then change as soon as possible. This is not as difficult as it sounds as many cash management solutions are now available on monthly on-demand payment plans, cloud based and can be installed quickly and efficiently without the need for IT involvement, onsite implementation teams or large upfront fees.
Given the availability of cloud-based cash forecasting solutions, systems can also be accessed remotely so staff working from home can work as efficiently and effectively as if they were operating from their respective office environments.
Actionable advice for post-crisis future planning
Preparedness. Post-crisis analysis will be critical for all organisations. Some will have managed better than others, particularly those who had previously invested in technology upgrades and system automation. Questions around: how well we were prepared, what worked or didn’t work so well, will be food for thought for all business leaders.
But the fact remains technology is absolutely key to maintaining business agility and formulating crisis preparation. Automating as many tasks as possible, in order to provide real-time access to all the data and information needed to make quick and informed decisions, can mean the difference between success and failure. Many organisations will use the time now and post-crisis to reassess technology needs and processes and plan investment in tech upgrades and automation to improve agility, accuracy and efficiency for the future.
Here’s a round-up of some actionable advice for finance and treasury leaders:
Information is power, now more than ever.
About Nomentia
Nomentia is a Nordic powerhouse for global cash management. We believe in a world in which businesses can make the right decisions no matter how unpredictable the times are. Our SaaS-based platform offers solutions for cash forecasting and visibility, global payments with bank connectivity, reconciliation, in-house banking, guarantees, and FX dealing. We serve 2,300+ clients in over 100 countries processing more than 200 billion euros annually. Cash is king!
What’s Money Transfer really about?
21-01-2021 | treasuryXL | XE |
Don’t let the technical details overwhelm you. Online money transfer is a quick, simple, and secure process for any of your currency exchange needs.
Have you ever sent money via any means that doesn’t require walking into a physical bank to complete the transaction? That’s money transfer. It’s a simple process of receiving or sending money to a local or an international recipient without any physical cash.
Money transfers are usually available in two forms: payment and transfer.
When you use a debit card at a store or your boss gives you your paycheck through direct deposit, you’re experiencing small-scale money transfer.
When you’re sending money to another account or person, whether it’s across town or across the world, you’re also making a transfer.
There are four key types of money transfer services to choose from. These are:
Wire transfer
Online money transfer
Bank draft
Money orders
You can use any of these methods for local and international money transfers—but not all options are created equal.
What’s the difference between the four types of money transfer?
Wire transfers are one of the common money transfer services that you can use to transfer funds from one bank account to another bank account or to a cash office.
Online money transfer usually involves sending and receiving funds via an online remittance company (such as Xe) anywhere in the world. Users can easily transfer funds from their phone or their desktop computer, and watch them be deposited in their recipient’s bank account within days (or hours, or even minutes). Better still, funds can be transferred in almost all known currencies across the world.
Bank drafts are mostly used for making payments to companies or organizations abroad. A money transfer company or a bank can issue a bank draft and it is cashable at a financial institution. Bank drafts seem to be the most expensive type of money transfer. However, larger companies and institutions prefer using bank drafts because of their audit trail features and security.
To use a money order for sending funds, the sender is required to go to a cash office to create the money order for a precise cash office and recipient to pick up. All the sender has to do is notify the recipient about the money order. It’s the responsibility of the recipient to pick up the money order at the cash office.
What type of money transfer should you choose?
The easiest, fastest, and most reliable method of money transfer is online money transfer. It involves sending or receiving money anywhere across the world instantly via an online remittance service provider such as XE.
For a small fee, you can easily send money abroad to anyone including your spouse, friends, loved ones, colleagues, employers or even your own account in another country. The online remittance service provider you choose (hint, hint, we recommend choosing Xe) will complete the transaction via their secured web-based platform so your recipient can get the money in no time at all.
What makes online money transfer such a great method? Well…
Why should you choose online money transfer over the other methods?
These are the key benefits of sending money via online money transfer:
How soon do you want your recipient to get the money you want to send over to them? If you choose an online money transfer service, your recipient will get the money quickly, making it the best choice when you’re on a deadline. Online money transfer isn’t just fast, it’s also secure and convenient. The process is simple and will take you just a couple of minutes on the phone or online, and your money and information will be secure during its trip around the world. Even more, if your money isn’t transferred or delivered for whatever reason, the money transfer company will inform you and help you to resolve the situation. If you ever need a fast, secure, and safe method of sending money or payments abroad, money transfer is the best option.
Money transfer is the cheapest method of sending money to anyone or making payments either locally or abroad. If you choose the bank-to-bank method of transferring money or use a third-party agent, you’ll end up paying a lot of fees. This is mostly because banks and third-party agents have a larger overhead cost which they transfer to their customers in form of charges. And those upfront transfer fees aren’t the only extra cost—you’ll also get a worse exchange rate, and could be charged additional hidden fees during the transaction. Those costs add up!
In contrast, online money transfer service providers only charge a small sum, and you’ll always know what you’re paying before you confirm the money transfer. So, if you’re interested in paying a lot less for a faster and safer money transfer method, use an online money transfer service like Xe.
Did you just breathe a sigh of relief? Online money transfer doesn’t involve any paperwork. You wouldn’t have to bother about filling paper forms or stacking paper receipts as proof of transactions. You can easily complete all your transactions online without any paper and you can view your transactions history anytime you want. And as an added bonus, if you’re planning to send multiple money transfers to the same recipient, we’ll securely save their information (and yours) for quick transfers in the future.
Have you ever had any reason to transfer money during an emergency in the middle of the night or while you’re busy at work? Going to the bank at such hours or even a third-party agent isn’t an option. But with online money transfer, you can easily initiate a money transfer at any hour of the day or night, without even getting out of bed. Online money transfer services have no opening or closing hours. Rather, they are available 24/7 to help you initiate whatever transaction you want. More so, customer support is often available 24/7 as well, making the online money transfer a more convenient option.
If you decide to send money via a bank, here’s what you’ll have to do:
Go to the bank. (Hope you remembered to get your recipient’s information beforehand!)
Wait in line. (Who knows how long that’ll take?)
Once you reach a teller, fill out the transfer paperwork. (Already sent a transfer to this person, at this location? Doesn’t matter.)
Online money transfers have no wait time, and no queues. You’re not required to leave the spot you are in or visit any location to make a money transfer. The entire process is easy, dependable, and efficient.
Using an online money transfer platform doesn’t require any skill or knowledge. Rather, online money transfer platforms are user-friendly, easier to navigate and use for any type of money transfer without the assistance of anyone or a third-party. This makes the entire user experience a very positive one giving you the opportunity to complete as many transactions as you want.
Interested in sending money with Xe? Take just 3 minutes to see what you’ll need to do.
Why choose Xe Money Transfer?
Sending money via Xe is fast, convenient, user-friendly, and secure.
Money transfers are completed within 1-4 business days, but often complete within 24 hours (or less).
You’ll get competitive exchange rates for your money.
You can transfer money to over 130 countries.
You can download the Xe mobile app on AppStore or Google Play and transfer money on the go.
Enjoy expert customer support for all transactions and inquiries
No hidden fees.
When you make a money transfer through Xe, you can trust that your money will reach its destination quickly, securely, and with no hidden fees.
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.
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