JP\/6\/JACK<\/p>\n
Minimizing risks of losses from<\/p>\n
foreign-exchange rate fluctuation<\/p>\n
Jack Villacis
\nNew York<\/p>\n
In an era of free global trade, one area of importance for
\ncompanies doing business across boarders is the ability to
\novercome currencies fluctuations that can have an impact on a
\nfirms' bottom line.<\/p>\n
Converting and transferring currencies to finalize a deal and
\npay companies across boarders shouldn't be an obstacle do to the
\nfact that recent advances in technology combined with secured
\nsophisticated trading software has made the Internet an
\nalternative way to facilitate and improve global payment services
\nthat can affect treasury workflow in a positive manner.<\/p>\n
The advantage in outsourcing foreign exchange issues to a
\nglobal payment service provider is their ability to provide
\nsecure and effective full array of global payments and trade
\nfinance solutions that save time and money while minimizing the
\nexpense of a front and back office work intensive labor cost.<\/p>\n
These global payment service providers have developed multi-
\nchannel platforms with dedicated point of contact for their
\ncustomers with free technical support and advice. One of the most
\nattracting features of these global payment service providers is
\nthat they have the capabilities and ability of real time
\ncentralized access to transact data across multiple offices and
\nlocations electronically. Adding these key innovations to your
\nbusiness will allow you to have an edge on your competitors.<\/p>\n
Since many companies neglect to take exchange rates into
\nconsideration when transacting business overseas or don't really
\nknow what the actual cost represents to their bottom line, three
\nbasic elements must be examined on a consistent basis: foreign
\ncurrency exchange rates, global payment solutions and multi-
\ncurrency accounts and risk solutions.<\/p>\n
Foreign currency exchange rates: The tasks of converting
\ndomestic currency into a foreign currency or foreign currency
\ninto domestic currency to receive or make payments are familiar
\ntasks for most companies. Typically these services can be found
\nin any major financial institution using standard inflexible
\nmodels to solve customer needs.<\/p>\n
Companies doing business internationally have to realize that
\nevery company with foreign exchange needs has a variety of issues
\nthey need to understand especially after understanding that what
\nmay be right for one business would not necessarily meet the need
\nof another business.<\/p>\n
These on-line non-bank foreign exchange providers can provide
\neffective ways in the service cycle (Presale, distribution and
\nafter sale) and flexible solutions to fit each situation.<\/p>\n
The most typical deal that is booked is a spot deal, which
\nsettles within two-business days. However, nowadays a company can
\nenter into forwards outright as well as forward open window
\ncontracts.<\/p>\n
These transactions should be an option at all times since a
\nforward outright contract allows the buyer to lock in an exchange
\nrate for a specified period ensuring a stable exchange rate no
\nmatter the volatility of the exchange rate at a latter date and a
\nforward open window contract allows the buyer up to the closing
\nof the window date or a year from the time the deal took place to
\npurchase the full amount or increment amounts of a specific
\ncurrency.<\/p>\n
Global payment solutions and multi-currency accounts: The
\nadvantage of these platforms is the capabilities to process
\nglobal payments that can be accessible and shared among multiple
\nlocations.<\/p>\n
These multi-channel platforms provide the widest choice of
\nsecure ways to make global payments and tracking its progress
\nwithin a large or small corporate structure. With these
\ncapabilities firms avoid human errors, save time and money.<\/p>\n
The ability to maintain and access multi-currency account is
\ncritical in any business now days; on-line platforms are a very
\neffective tool when making global payments. The advantage of a
\nmulti-currency account through on-line platforms is that it can
\nbe divided and true split trades settlements among multiple
\nparties and your financial institution can route payments to a
\nforeign entity without necessarily executing a deal for that
\ncurrency, thus making the process more efficient.<\/p>\n
One great benefit in having multi-currency accounts is the
\nability to hold money in a foreign currency account for future
\ndisbursement.<\/p>\n
Risk solutions: Currency movements are among the least
\npredictable factors in international business. It is imperative
\nto have a dedicated individual focus on this issue. Without an
\neffective currency management strategy, this volatility can
\ndramatically alter your bottom line.<\/p>\n
Companies should consistently consider risk solutions as a
\nhedging tactic for a specific transaction or as a strategic tool
\nto control cash flow.<\/p>\n
The cost of keeping an efficient department to track these
\nrisks associated with exchanging currencies are very high if your
\ncompany is planning to do it in house, however if you out-source
\nto a global payment service provider the cost of administration
\ndiminishes to a minimum.<\/p>\n
Remember integration, security and training is topics that
\nshould be discussed when searching for the right global exchange
\nprovider. In terms of integration, if you were to design, built
\nand maintain such a system assuming that your present system has
\nfunctions that can be integrated, can cost a significant amount.<\/p>\n
The benefits of outsourcing to a foreign exchange specialist
\nare that they offer platforms that can easily transform your
\nbusiness in a matter of days with a minimal investment. As a
\nresult offering a compressive browser based package that gives
\nall domestic and global customers easy access to facilitate
\nglobal payments with internal treasury back offices. These
\nplatforms are critical if you have multiple locations with needs
\nto centralize all foreign payments saving processing costs and
\neffectively expand its services in real time.<\/p>\n
Security is the key for online foreign exchange dealings;
\nevery foreign exchange provider should be able to provide an
\nonline Customer Security and Privacy Policy. The benefit in using
\nthese foreign exchange providers is the ability to transact in a
\nsecure banking environment.<\/p>\n
Information is being transmitted through secure encrypted
\nlines; most of them use secure operational centers. In addition,
\nthese providers should also have a Compliance Policy in place in
\norder to comply with money laundering matters and local, state
\nand federal taxes authorities.<\/p>\n
The writer, President\/C.E.O. of New York Capital Enterprises,
\nLLC. a global payment service providers, can be reached at
\njvillacis@nycapitalent.com.<\/p>",
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