Currency risk solutions for businesses dealing with international clients
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Trying to make the most of international business deals can be quite an exciting and lucrative world, however, it does come with a few more challenges that you might not face on a domestic home base.
The main challenge is often with currency fluctuations and changes, as these are things that you have no control over, unfortunately. Of course, any avenue of your business that you do have control over, even if it is with international business, is going to work well, however, currency fluctuations are just one of those things that are slightly out of your reach. Or are they?
There are certain currency risk solutions that you can look into. Although you might not have control regarding what the euro or the pound are doing, you do have control over when and how you send certain currencies.
This article aims to shed light on a few of the risks and challenges that businesses face and then outline the currency risk solutions for businesses dealing with international clients.
Challenges you face with currencies and international businesses
Doing international business can come with many challenges, such as cultural differences, time differences, and practice variations.
All of these can be controlled somewhat, by going to cultural classes or agreeing on a set time that suits both parties when it comes to time zones and just getting accustomed to one another.
However, one area that is a rather large challenge is when it comes to currencies. Here are a few reasons why:
- Currency fluctuations: the reality of currencies is that they fluctuate. Therefore, if you are handling international business, this can be quite tricky because every dollar or euro that you send might come with a different value to the business client that you’re dealing with.
- Political changes: the often frustrating thing about currencies is that they’re not only impacted by the stock market or economics, as many would want to believe, they are often impacted by political changes too. If a certain leader gets more power or if there are changes within large organizations, this can impact the strength of a certain currency.
- Natural disasters: another interesting thing that businesses deal with, that impacts the strength of the currency, is natural disasters. If natural disaster happens in a certain country, it can greatly weaken their currency which can have a massive turnaround effect on international businesses and their success.
- Fees: this is by far the biggest and most common concern. International payments are expensive in general, but when moving large amounts, regularly, it can add up very quickly, especially for businesses as these tend to incur even more fees.
Currency risk solutions to bear in mind
The way that you can gain some control over the currency fluctuations and essentially create risk solutions for yourself is to take the control into your own hands. You can do this in a few different ways.
You should start by finding a currency broker that does the work for you. As an international business, you have enough things to worry about. You have employees that you need to manage, international clients you need to spend time with, and the list goes on.
Therefore, if you’re able to hire a currency broker and a company that manages when and how to send the currency you send, you can alleviate the pressure on your business and also find experts to manage the currency risks for you and create solutions on your behalf.
A leading money transfer app SendAbroad recommends opting for a reputable broker that specifically works with businesses and reflects your company’s needs. For example, TorFX or RegencyFX, are great for managing large currency transfers, while Airwallex or Sokin are better for currency management with company cards, APIs, multi-currency accounts, and more.
You can also try to stay transparent with international clients that you’re dealing with. If certain changes are happening within the currency that do not advantage you, you can either let your clients know that there will be a delay or take advantage of FX risk solutions and currency hedging such as FX options, forward contracts, FX orders, and many more.
Alternatively, you can also look at taking currency loans in advance, so that you essentially have a pool of additional funds on the side, that you can use when needed.
Finally, depending on your company’s needs, you can take advantage of business IBAN accounts, expense management tools, and virtual cards. These are more useful for ongoing international payments for expense tracking, client payments, and granular control.
Moving on an international scale
As you can see from the above, moving money on an international scale, especially when it comes to international currencies, is interesting.
It comes with quite a few challenges but it also comes with great solutions that you can implement to reduce the risk that you experience.