You know your customers don’t like nasty surprises, especially if it means higher prices. If you can predict your costs over a twelve month period it means you can afford to price your products competitively without eroding your profit margin. So whatever the nature of your business, payment in foreign currencies poses an inevitable risk – due to the fluctuating nature of FX markets (thanks to the likes of geopolitics, inflation, and public debt). These abrupt changes in rates can affect the value of your currency exchanges, leaving you prone to losses. So, it’s before this point, where you should consider a currency strategy.
Implementing a simple but effective ‘currency strategy’ will help your business manage any future currency volatility and will provide:
- Cost certainty
- Ease of forecasting
- Stable cashflow
- Protect profits
Following a simple 4 step process below will help you understand your currency risk and plan for the unexpected whilst you focus on the day-to-day running of your business.
1. Review exposure – Understand your future exposure to currency. What suppliers do I need to pay over the next 12 months
2. Understand company risk appetite – Understand your business appetite to currency risk – high or low
3. Develop your strategy – Working with our team of experts we can tailor a strategy for your business and set a minimum hedging threshold and choosing the right products
4. Assess regularly over 12 months – Caxton will help you implement the right plan at the most optimal time whilst continually monitoring it for you
For more information, contact our team.
.png?width=1080&height=1080&name=Landscape_Open_Red%20%26%20Text%20(9).png)
