Bobby Ward, Director of Vorto Trading, suggests what to consider when looking to import and export products overseas and the most cost effective payment solutions
If your business imports or exports goods such as building materials, vehicles or furniture and you’re trading in the international marketplace, your profits can be hugely impacted by your choice of international payments provider and foreign exchange fluctuations. The best way to maximise your profit when importing and exporting is to understand your foreign exchange options and be prepared for the fluctuations within the FX market.
Ask the Experts
FX specialists, such as Vorto, are called specialists for a reason. Traders study the market and understand what factors influence exchange rates so that they can predict fluctuations and protect your business against these as far as possible.
One of the main risks you face in exporting goods is buying in a strong currency and selling in a weaker one. This would have significant consequences for profit margins which is why it can be beneficial to work with an FX specialist to guide you through the sometimes choppy waters of the money markets.
How you’re being paid or how you’re paying a supplier abroad are key factors in reducing the risk of FX fluctuations. As an exporter, your customers will also be interested in getting the best possible exchange rate on their purchases so you will need to decide on whether the transaction is in GBP or the local currency of your customer. This entirely depends on the current market conditions.
Your designated trader will be able to talk you through product options to remove as much risk as possible to help you keep your margins as healthy as possible. These options include: spot trading and setting up forward contracts (CLICK HERE to read more about these). This means you don’t have to gamble on making or losing money as the exchange risk has been pre agreed in advance of the business transaction taking place.
For instance, if you sold a container filled with a product to an international buyer who will pay on delivery in two months’ time, the exchange rate could have changed significantly by the time the goods arrive. In this instance, the best option may be to fix the exchange rate today for the transaction taking place in two months’ time. This will help lock in your profit margin and eliminate the risk of running at a loss.
Managing Foreign Exchange
Once you have a better understanding of the options and fluctuations, as discussed with your designated Vorto FX trader, you can set up your payables and receivables accordingly and create a strategy which targets your goals for exchanging currencies. The strategy will include FX methods you plan to use and assigning these to each market you trade with. Reviewing market changes and conditions is an important part of your FX strategy in order to help you to hit your targets, and Vorto are well placed to work with you to achieve your goals.
We take pride in our client relationships, and work hard to help you achieve the best possible business solution for every transaction. If you would like to talk to us in more detail about handling your Foreign Exchange needs, please contact firstname.lastname@example.org or visit www.vortotrading.com