-->

News

Forex – Rates and charges only half the equation

There has been good insight recently in the Sunday Times into identifying the costs of forex paid by SME’s and individuals. Articles on charges and margins that promote the currency providers as the complete solution are at risk of misleading companies.

The information falls short from the point of view that transfer costs and margins are only half the equation.

The other half of the equation is ensuring that the business interacts with the forex market in the correct manner.

Companies need to know firstly what their exposure is, how it arises, when it arises and what risks are posed due to currency movements from the point the exposure arises to the point it is due for payment.

This includes understanding how to account for the underlying exposure, how the product is priced and the behaviour in pricing of competitive products.  It needs to be understood what the impact will be on the bottom line of price movements and what needs to be done to address these risks.

This does not need an expensive treasury manager but does require the combined insight of addressing the market from the customer needs perspective.

Getting this right saves more than charges and margins.  Combined the savings can easily reach 5% of the forex turnover.

An independent forex adviser is crucial to avoid conflict of interest as currency providers are transaction oriented and you need a treasury manager like Valufin to ensure you know what rates you should be getting, to remove charges and to ensure you act at the right time, for the right reason requesting the right currency instrument.

Valufin works for you interacting with all providers that are appropriate for your needs.