when going global
Volatile currency markets are a threat to every business, whether it is a three-man technology start-up in Hoxton or a global corporation with thousands of employees.
with suppliers and buyers. For example, a business can agree to bear the risk of a certain sterling-euro trading range, but its customer agrees to pay if the moves are larger, in either direction, thereby absorbing the cost or reaping the benefits of a favourable move.
There are also specialist services available to businesses that want to protect themselves from volatility in currency markets. If a business has a target exchange rate, an international payments specialist will monitor the market for them 24 hours a day. This service is particularly useful if a business is happy to wait a little longer to achieve their desired exchange rate. Standing orders can also be valuable because the business knows the market is being monitored, but they do not have to waste their time or
55 entrepreneurcountry
human resource to track it themselves. A business will know exactly the price of its payments cost, when its account
will be debited and when its suppliers will obtain their funds.
A business that uses a combination of these risk management tools to fit the particular risk profile of their business can all but remove the currency risk without too much effort and reap the benefit of more stable and predictable cash flows.
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