Is your company affected by currency fluctuations?
Setting budget levels may be your answer!
When transacting Foreign Exchange, it is important to understand budget levels. It is true having a low FX Margin will reduce the cost of purchasing currency but covering your budget level is vital to ensure the effectiveness of a transaction. One thing we cannot control is the direction of the currency markets (although you can make an educated guess) but we can control our budget levels and FX Margins.
The importance of budget levels varies for every business, as no two businesses are the same.
Two main factors to consider when setting your budget level:
How big are your profit margins?
- If your profit margin is 1% you will be vulnerable to exchange rate fluctuations more than a company with a 200% profit margin.
How competitive is your industry?
- Do they adjust prices annually, semi-annually, quarterly, monthly, weekly, daily, or even intraday?
- The shorter the time frame could mean you are at higher risk due to exchange rate fluctuations
If you or your company needs assistance establishing your budget level, do not hesitate to contact us
Follow our hashtag #GiveBackToBusiness for more FX tips