Business owners with experience know that doing international business isn’t as simple as selling your product in another country. A key consideration when buying and selling overseas is how to best leverage the foreign exchange (FX) market, which is the largest financial market in the world, with trillions of dollars worth of currencies changing hands every day. Here are three tips to keep in mind when conducting international business and dealing in foreign currencies.
1. Streamline all FX information within your finance department, so you can best determine your next steps. By streamlining all FX information in the same location, finance executives will be able to leverage the best FX strategies for all currencies.
2. Carefully evaluate what currency is best when invoicing in a particular country, and recognize the benefits and how they will affect your sales and bottom line. Often companies will want to make purchasing the product as easy as possible in international markets and that means pricing in the local currency. Make sure you understand how the exchange rates will affect your profit and whether if you should implement a hedging strategy.
3. Don’t do it alone. Partner with a FX expert to capture the best FX payment options, help you define risks and develop strategies that are optimized for your unique exposure and risk needs. Corporate foreign exchange is a niche skill within the corporate finance department. It is OK not to understand the finer points of FX and it is wise to ask for help in effectively managing it.
Now more than ever reaching out to global customers is within the small business owner’s reach. However, the importance of balancing the cost and complexity with an appropriate FX strategy cannot be underestimated.
GPS Capital Markets
Salt Lake City
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