Risk management
Protecting your profit
Businesses which have international customers, suppliers and assets are exposed to exchange rate volatility. If not protected from this instability, profit margins can be eroded overnight.
Travelex Global Business Payments offers a range of flexible solutions designed to protect businesses from foreign exchange volatility, by fixing exchange rates. By removing the uncertainty of exchange rate fluctuations, the price of the goods being purchased from an overseas supplier can be fixed in local currency, thus locking in profitability for the business.
Forward Contracts
For example: A European customer has an invoice for USD 1 million but it is only payable in 6 months time. The customer decides to protect his costs by purchasing a forward contract at 1.15. When the time comes to pay the invoice the rate is 1.76. The customer pays EUR 869, 565.022 for the $1m because the forward contract is in place at 1.15. If he had to go the market at the time the invoice is due they would have paid EUR 952,380.95. The forward contract has saved him EUR 82,815.73.
A forward contract allows you to budget accurately as you know what your costs will be as soon as you receive an invoice, regardless of what happens to exchange rates between the date of receipt and the date of payment.
Fixed Forward Contracts
Forward contracts can protect your profitability and improve your bottom line by minimising foreign currency risk. A fixed forward must be utilised and settled on a specific date. They are useful when you have an invoice to pay or know that a payment will be received on a fixed date.
Open Forward Contract
An open forward contract sets a window of time during which any part of the contract can be settled as long as all of it is paid for by the final date. An open forward is designed for those who know they have a number of bills to pay in a certain currency and this gives them flexibility about what date they wish to use the currency.
Market Analysis
Global market volatility makes access to timely information and analysis a critical component of your international business strategy. By staying on top of market-breaking news you can lock in favourable exchange rates, eliminate currency risk and plan for upcoming payments.
Whether you require detailed analysis of historic market events or up-to-the minute forecasts on tomorrow’s trends, our expert market analysts will equip you with the information you need to make intelligent choices for your business.
The financial and political news driving global market activity is tracked by our analysts and our client managers provide a mix of market alerts, exchange rate information and in-depth analyses of the currencies you use.
Our reporting is easy to use. We provide all the necessary detail in a clear, concise format to help you make strategic decisions, such as when to purchase on the spot market, when to hedge or when to tap into Holding Balance reserves.
Market Information Services available include:
Consultancy Services
Travelex Global Business Payments can provide you with customised solutions for your organisation to minimise your commercial foreign exchange risk, including identification and quantification of your exposures.
We can help you to:
- Mix and match a range of products and services to mitigate your foreign exchange risk.
- Protect your operating margins in uncertain economic climates.
- Develop a long term foreign exchange hedging strategy.
Foreign exchange is all we do, so when you deal with Travelex Global Business Payments you know you are dealing with experts. Size and experience count in this specialised area, and Travelex Global Business Payments has both. Why not talk to us to find out more about how we can help you with your foreign exchange planning.
