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International deals? Stop currency fluctuations damaging your deals
One of the biggest challenges of doing business abroad is currency fluctuations. Hardly a week goes by without a news report of a major currency move. That’s why it’s essential to protect your payments to overseas staff and suppliers by developing a sound currency strategy.
As GSA deals with a number of exporters and international businesses, we are frequently asked about FX. As such, we asked our friends at OFX for some tips on ways to reduce currency exposure.
Top 5 ways to reduce currency exposure
1. Consider hedging. Hedging involves taking an offsetting position in a related security, such as a futures contract. This means you can keep your cash flowing as predicted.
2. Lock in a Limit Order. If your money transfer dates are flexible, use a Limit Order to set your target exchange rate. When the rate is right, you just confirm the transfer, so you can stay on top of the markets even while you’re out playing golf.
3. Reduce the amount of time between an invoice and a transaction’s settlement. Doing so may help protect your company against extreme currency fluctuations that could hurt your bottom line.
4. Negotiate all contracts with currencies in mind. Many suppliers prefer to be paid in currencies like USD, EUR, or AUD. Major currencies may be less susceptible to large fluctuations than emerging market currencies, which could benefit your business. That said, if your supplier is converting costs in Indian rupees into dollars, they could potentially overcharge you on the exchange rate unless you have one specified in the contract.
5. Stay informed with news and updates. Once you go global, market movements start to matter more.
Established in 1998 as a smarter alternative to using your bank or existing foreign exchange services, OFX will offer GSA clients bank-beating exchange rates on international transfers.
Phone: 1300 300 424 (Local call) +61 2 8667 8090 (International)