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How to Minimize Currency Exchange Risk when Paying Overseas Suppliers

Currency Risk Chart

Looking to make a business overseas money transfer? You don’t have to be at the mercy of exchange-rate fluctuations if you know the best methods to hedge currency risk.

Foreign currency risk is part and parcel of making overseas payments. Yet, this shouldn’t faze you once you discover effective ways to mitigate currency risk. With the right currency risk management solutions, global businesses like yours can diminish uncertainties and volatility within the FX markets.

Why do exchange rates matter to your business?

If you have decided to take your business global, it’s crucial to consider the effect exchange rates can have on your bottom line. First, you have to accept that doing business internationally carries the risk of exchange rate fluctuations. These fluctuations happen for various reasons, such as supply and demand, economic performance, inflation reports and geopolitical developments.

Exchange rates matter because they significantly impact your overseas costs and eat into your profit margins. Therefore, you must keep a sharp eye out for competitive exchange rates to maximize your returns. Being aware of exchange-rate volatility is only the first step – you need to develop a currency risk management strategy that protects your profits time and time again.

Remember, even the slightest fluctuation in the exchange rate can lead to brutal costs, especially where large sums are involved. So, a critical skill in international business is identifying competitive exchange rates to hit your targets.

What are the best ways to hedge your exchange-rate risk?

You may have no control over how and when exchange rates fluctuate, but that doesn’t mean all you can do is cross your fingers and hope for the best. There are two main ways to minimize currency risk on your overseas payments.

Forward Contracts

When you utilize a forward contract, you lock in your desired rate for a future payment. A forward contract is one of the best specialist currency tools for protecting against market volatility. So, while there may be some uncertainty within FX markets, your business is not entirely helpless when making cross-border payments.

You can easily forecast your business expenses since you have better control over the currency exchange rates for future payments. When you use a money transfer provider like MTFX, you can lock in your desired exchange rate for up to 12 months, giving you long-term control over your business funds flow.

Market Orders

Market orders are another currency risk management solution that allows you to set upper and lower limits for your trades. Thus, you can lock in gains or control downside risk by targeting a specific rate. A market order offers more flexibility than a forward contract because it doesn’t have a scheduled date. Instead, your payments are only processed when the desired rate is reached.

So, if you don’t have a strict delivery date for your funds, you can set targets better than the prevailing rates. Or you can use hedge funds or Spot Loss orders to ensure your trade is complete before the market moves beyond your risk threshold, preventing further loss. 

Once the market aligns with your target, MTFX’s automation technologies will trigger the trade. Again, market orders enable you to budget effectively while capitalizing on profitable rate movements.

Can a dedicated currency specialist help mitigate the risk?

Now that you know about currency risk management tools, you may wonder where to get this advanced service. Consider using a currency specialist like MTFX to help mitigate exchange-rate fluctuations. Doing so offers the following benefits:

  • Save money – With market orders, you can take advantage of potential opportunities that increase the value of your transfer, depending on how the market moves.
  • Get expert guidance – The currency market can have many twists and turns. So it helps to have dedicated FX specialists that understand your needs and provide tailored advice based on the market’s current state.
  • Leverage FX tools – MTFX provides access to the best FX tools to make the most of your transfer. The list includes currency rate alerts, currency charts, and a live rate currency calculator.

Besides helping manage your exposure to exchange rate changes, MTFX offers competitive and bank beating rates. You’ll get rates 3-5% lower than what you would get from your bank and lower fees. 

MTFX’s secure, safe, and 24/7 online platform allows you to set up an automated regular payment plan. This translates to hassle-free and cost-effective international payments that take the sting out of currency fluctuations.

Minimize Currency Risk for Overseas Money Transfers

Protect your business from adverse exchange rate movements with MTFX

You can do a lot to protect your business when making overseas payments. 

An MTFX business account is the vehicle that will help you navigate dramatic exchange-rate fluctuations. After all, why gamble away your profits when you can take the stress out of the international payments process by using trusted risk management solutions?

With an MTFX account, you can:

  • Minimize currency risk easily and efficiently
  • Enjoy higher and stress-free business growth
  • Gain more financial control of your business

Open an account with MTFX today to benefit from minimal currency risk and quick, easy money transfers.

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FAQs

Individuals and businesses who need to send money in foreign currency internationally can use MTFX’s services. The beneficiary of the transfer must have a bank account for the funds to be paid into. Personal clients usually use our services to transfer money between their own accounts in two different countries. Business clients usually use our services to transfer funds to suppliers, fund international operations, or repatriate overseas earnings.
MTFX offers currency exchange rates that are 2-5% better than those offered by the banks. Personal clients usually save hundreds of dollars per transfer and for larger transfers, the savings can run into the thousands. We also offer excellent customer service, dedicated currency specialists, and a 24/7 online platform with best-in-class technology that allows you to complete transfers from any device virtually anywhere in the world. Business customers save with better currency exchange rates and proven solutions geared towards managing and mitigating foreign exchange risk. Our solutions include forward contracts, market orders, rate alert services, and much more - all backed by great technology and great people.
Funds can be transferred via wire transfer, Electronic Funds Transfer (EFT), or ACH payment services. MTFX maintains bank accounts in all major currencies with highly-rated banks. Our banking infrastructure ensures that you can transfer funds to us quickly and securely.
Our global network of banking partners allows us to get funds to virtually anywhere in the world quickly and efficiently. Most wire transfers from MTFX will be received by your beneficiary within 24-48 hours. MTFX also offers same-day transfers that are almost instantaneous, as well as low-cost in-country payment services for your less urgent transfers. For further information please speak to one of our currency specialists.