Tired of financial market fluctuations affecting your bottom line? Answer: Fixed forwards.

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17 January 2019

thomasdodds

Whenever you are transacting large sums of money internationally, it is difficult to know exactly how much you will be paying. This is due to fluctuating exchange rates—even a small fluctuation can have a huge impact on your company’s financials.

W
e understand that it can be hard to plan future business purchases with a degree of certainty. If you are a small to medium sized enterprise (SME), making regular payments for substantial amounts, it is worth coming up with a way to lock in cost of the payments. That way you won’t be left in the lurch with any sudden and unfavourable exchange rate movements.

What’s a fixed forward?

When transferring or repatriating money overseas, fixed forward contracts protect you against market volatility—something that can cause significant difficulties for SMEs.

Say you are a UK importer who needs to pay your supplier in Euros in six months’ time. However, the value of the Euro could rise or fall in that period. Using a fixed forward contract, you can lock in today’s exchange rate for a payment in six months.

This means that you will not be affected by any exchange rate movements when the time comes to pay your supplier.

What are the advantages of a fixed forward contract?

Fixed forwards provide a certain measure of certainty in all foreign exchange transactions.
Knowing exactly how much you will be paying could help you with better budgeting and planning for your business. If you have noticed that the market is working in your favour, you can lock in a fixed forward contract to make the most it.

If you find the market unfavourable when the time comes to pay your supplier, you will be protected from any exchange rate losses that you could not (and would not) have accounted for.

Why Ebury?

Our range of forward contracts means that you can choose whatever suits you best. From fixed forwards, flexible window forwards and non-deliverable forwards you can decide the best route for you and your company.

As a client of Ebury, you will also have your very own dedicated relationship manager who can work with you to best understand your business and build a suitable currency risk management strategy. Along with our in-house market analyst team, we procure daily, weekly and specialist currency reports to support you in making educated decisions for your business.

To find out more about how we can help grow your business, contact us or check out our website for more information.