1. Keep a disciplined approach
When the market is neutral, it’s easy to develop a policy that’s easier to navigate. However, in the next few weeks or months, conditions will change, and a calm market strategy won’t be enough to account for fluctuations. Your strategy should protect your business from unforeseen, unavoidable international events, such as natural disasters or tumultuous governments.Dealing with multiple currencies means managing numerous currency risks, which makes it even more critical to ensure that discipline is the driving factor of your strategy. When your decisions aren’t solely reactive, you can quickly and adeptly respond to rate changes.
2. Focus on regulatory requirements
Meeting regulatory requirements and proving that you’ve met them is essential for any business. Every international transaction is governed by many laws, regulations, and reporting requirements from different countries. When building your strategy, it’s important to research and understand all legalities for every country that will be involved.Small and midsize businesses may not have the in-house capabilities to do this effectively, so consider hiring a specialist or implementing the right tools. Several payment-processing platforms can automatically handle these and other functions for you, and most come with global currency management capabilities.
3. Have a cash-flow system built for forex
Whether it’s regulatory or not, efficient cash flow should be the theme of your payment-processing system. Any invoicing and payment system you use should automatically include the correct fees and regional identifiers, lock in forex rates, and track fund transfers for each individual transaction.4. Adopt an automated payments solution
An automated mass payments solution can also help you manage many things; large volumes of currencies, complicated payment processes, and tight schedules across the globe. Once implemented, and guided by your strategy, the solution can automate back-office tasks, help you efficiently mitigate transaction risks, and streamline your global AP process.5. Centralize your forex treasury management
By automating and streamlining payment processes for companies that operate globally, fintech has made it easier to centralize operations. For example, you can leverage storage and in-memory software to create a single nerve center for your global payables process, with management and analysis all in one place.Any data you receive at any point across the globe will be collected in-memory, making it immediately accessible. This creates a foundation that allows your company to view all of its assets and subsidiaries in real time. You can also gain valuable insight into what factors might impact your foreign currency management strategy.
Your company doesn’t have to be large to feel the effects of foreign currency mismanagement. The regulations and costs of foreign transactions can be successfully managed with a clear and disciplined strategy. No matter the size of your business, investing in the right processes and solutions is an essential first step.
