Globalisation, the Internet, ecommerce, and a liberalised approach by countries towards trans-national and international trade have enabled firms, small and big, to look beyond their domestic markets and explore global trade prospects.
While catering to an international clientele offers significant benefits and advantages, firms must also be prepared to face risks and challenges that domestic companies and firms never face.
This is where relying on a reputed and trustworthy commercial foreign exchange company can prove to be very beneficial. Read ahead for an overview of the benefits of working with such intermediaries when finalizing international contracts and carrying out large international transfers.
Minimise Impact of Exchange Rate Volatility
Finalising a contract worth $100,000 with a domestic client will result in a guaranteed income of $100,000 for your firm. There is no question of any revenue uncertainty. However, international contracts where payments are made or received in foreign currencies involve an inherent risk of exchange rate volatility.
China’s decision to devalue its currency or a decision by a European Union member nation to default on its debt can result in forex market volatility, which can consequently lead to an adverse impact your expected revenue or anticipated costs.
The biggest challenge involved in such transactions is that it is virtually impossible to anticipate how the exchange rates will move. A commercial foreign exchange company can help you hedge your positions and minimise impact of adverse changes to the exchange rate. If you are finalizing a Euro contract, then locking your exchange rate in advance can help you stabilise costs and revenue well in advance.
This will help you take exchange rate volatility out of the equation when finalising multi-currency contracts with your foreign clients and suppliers. This will ensure your costs and revenue calculations are not subject to variations due to factors beyond your control. This certainty will help you make swift adjustments to your trade practices to overtake competitors who are subject to frequent exchange rate variations.
Process Large International Transfers
Unlike domestic contracts, unanticipated delays in processing of international payments or receipts can result in significant complications, including avoidable and unnecessary litigation.
Sending money to a foreign client can involve multiple instances of currency conversions and completion of formalities involving many international financial institutions. Similarly, receiving payments or establishing credit lines can involve many additional procedures and formalities.
Hiring the services of a reputed foreign exchange company will help you carry out large international transfers without worries of delays or inadvertent procedural violations. You just need to issue the necessary instructions and wait for the client to confirm receipt of your payment.
Enhance your Firm’s Presence and Reach
With the right foreign exchange firm by your side, you can proceed ahead with international contracts in different currencies like Euro, Yen, and the Renminbi without any worries. You lack of knowledge about how international currency markets function and how foreign currency transfers are processed will not impair your ability to benefit from global opportunities.
Deploy Forex Strategies to Maximise Revenue
A smart entrepreneur will never let go of any opportunity to improve revenue and maximise profits. Commercial forex companies can help you leverage your existing exposure to take advantage of anticipated changes in the value of your currency. You can create a safe strategy where risk of losses is minimised to boost your income.
Expert forex market guidance combined with strategic advice and assistance can help you extract double benefits from your firm’s foreign currency transactions.
Strategic Advice and Guidance
Should you setup foreign currency deposit accounts for receiving foreign revenue and making foreign payments? Or, should you continue converting all receipts into your domestic currency before initiating forex payments? A professional firm will help you analyse the pros and cons of different strategies after considering relevant regulations, compliance norms, and costs.
The combination of expert advice and online access can help you carry out foreign currency transactions in a manner no different than executing a domestic transfer. There was a time when only big firm with deep pockets could consider exploring international markets.
Today, a competitive strategy combined with the services of a professional foreign exchange company can help you expand your presence to different parts of the world without facing significant risks.