Remember the strong dollar? In case you haven't noticed, it's fallen sharply in the last month against the euro and the yen. The next time you see a bill for imported European goods, the price in dollars may be a lot higher. There went your profit margin.

If you don't pay much heed to currency rates, you're like many small U.S. businesses, says Keith Cheveralls, managing director of global foreign exchange for BankBoston.

The entrepreneurs Cheveralls encounters are doing more international business. Many are intimidated by currency transactions though. They automatically ask to be invoiced in dollars. "That's putting your head in the sand," he warns. Even folks who do modest or infrequent forex transactions can benefit from simple — but surprisingly underused — strategies. The most basic is to ask your counterparty what his or her local currency price is before you accept a dollar quote. Convert that price at a market rate. Then decide which one to use. "That accomplishes two things in my mind," says Cheveralls. "You get an economic comparison.... It also sends a pretty strong signal to your overseas supplier that you are a pretty savvy business person."

Expect the huge forex market to change directions with lightning speed. A price in dollars might be great one week and lousy the next. It may make sense to absorb a less advantageous rate to give a valued supplier or customer a break. And if rates favor you over a long period, consider adjusting your prices to share the wealth. When the dollar is strong, you may revel in great margins on foreign goods, while your suppliers suffer from higher costs of imported materials. Let them raise prices a bit to compensate. Savvy foreign traders know it pays not to be greedy, says Cheveralls. The next time the market turns, you'll need your friends.

By Julia Lichtblau in New York
julia_lichtblau@businessweek.com