For wholesalers with a footprint overseas, exchange rate fluctuations can have a significant impact on their margins and bottom line. As a result, wholesalers can’t risk taking a reactive approach to international payments. This is a complex area, where businesses often seek advice. But there are some measures that wholesalers can implement to ensure their businesses steer clear of unnecessary disruption, and continue going from strength to strength:
Forward Contracts – Recent events have shown that the value of Sterling can shift in a matter of days. Wholesalers can mitigate this volatility by securing a Forward Contract, allowing them to buy or sell a fixed amount of currency at an agreed rate for up to 12 months. This helps protect the business and provides more clarity on purchasing and spend.
Businesses can also select a target rate for a specific currency using Market Orders, helping to further manage potential market fluctuations.
Paying invoices quickly – If cashflow permits, wholesalers should pay their invoices in foreign currencies quickly to limit their exposure to FX risk. By paying upfront, they can shield their business from any future changes in exchange rates. Businesses can also batch multiple payments together to secure the rate for all invoices at any one time.
Order ahead – If wholesalers have the cash reserves to commit to extra stock, they should consider ordering ahead, when GBP strengthens against other currencies. This means stock can be acquired when it’s more financially advantageous, rather than having to purchase when currencies may not be so favourable.
With all the current complexities in the world, it’s easy for wholesalers to become focused on short-term, one-off currency wins. But a longer-term approach, that sets an agreed level of risk, can offer greater financial gains.
American Express has a range of solutions and tools available to help businesses tackle international payments and FX fluctuations. This includes dedicated FX experts on hand to help wholesalers manage cross-border payments and Forward Contract solutions to manage volatility. With the range of American Express® Business Cards, businesses can manage non-Sterling payments or enjoy premium travel benefits.
Businesses with an eligible American Express® Card will earn valuable Membership Rewards® they can maximise from their cross-border payments too.
If you’re looking to manage your cross-border payments and minimise disruption, American Express® FX International Payment Solutions can help. Learn more at www.americanexpress.com/en-gb/business/international-payments
Comments are closed.