If you are a company exporting goods overseas and receiving payments in a foreign currency, then the most important aspects of this process is to control your currency risk; you must ask yourself "What is a payment in a foreign currency (e.g. Euros), going to be worth to me in my currency (e.g £GBP) when my customer pays me".

All companies must be very aware of the ever changing value of their own currency against other foreign currencies with which they deal. Right from the start of selling goods abroad special attention must be made to receiving currency from overseas purchasers.

When dealing with funds from overseas.

1. Always set up bank accounts in the foreign currency you are receiving with your bank.
2. Before quoting a price for the exported goods, always check what the current exchange rates are (if the price of your products or services vary).
3. Look at the possibilities of ‘Hedging’ your risk once an invoice has been raised.

Hedging your risk.
In order to guarantee the value of your invoice, you may be able to buy a currency contract which will fix the revenue of your overseas sales before the foreign currency payment is received and thus avoid currency fluctuations.

Some customers abroad will be happy to pay for your goods in your own currency. If they want to pay in their own currency then is always good to be flexible, but the currency fluctuation risk must be understood and built in to the deal, or hedged.

Article kindly submitted by Tim Sheehan
tim.sheehan@worldfirst.com