If doing business in one currency sounds like a dream, you're not alone. Trading internationally as a small business can seem complicated, unclear and even risky. In this blog article, we explore why this is and the options available to trade globally in a fair and simple way.
how small businesses manage foreign finances
Foreign currencies fluctuate, making the value of your future payables and receivables uncertain. Businesses that trade globally usually have to choose between simple but risky and safe but complicated as alternatives for managing international finances.
Not surprisingly, 96% of small and medium-sized businesses start by choosing simple but risky - trade with suppliers or buyers in foreign currencies and take the risks and hassle of dealing with foreign currency amounts and associated currency swings (1). Sooner or later many repent as they have to endure stress and losses due to adverse currency moves.
The remaining 4% go with the safer but more complicated way of planning and protecting their foreign cashflows from currency swings. However, this usually comes with manual processes and related mistakes and using legacy solutions from their banks and other providers. So, what are the options?
EVERY INVOICE & PAYMENT IN HOME CURRENCY
Currency swings can have an impact on your cashflows and make you less competitive in foreign markets. So, how do you remove this uncertainty from your finances? Rather than choosing between stress and sweat, you can simply turn any specific foreign currency cashflow into domestic one.
And what are the results of doing this? More predictable profit margins and cashflows + easier finances and accounting = happier customers.
MAKING FOREIGN TRADE FAIR & EASY FOR SMALL BUSINESSES
Making global trade more affordable and accessible for small businesses is only fair. HedgeFlows is a simple way to manage foreign currencies and remove uncertainty from your finances. With our platform, you can easily book guaranteed exchange rates in advance so you can use it for your future payables. This fixes its value in Pounds Sterling, and you can be certain to pay the correct amount in Pounds Sterling when the payment is due.
HOW TO START YOUR HEDGEFLOWS JOURNEY
If you're now wondering how all this works in action, we encourage you to try it for yourself. It only takes a few minutes and you can test the platform for free during three months without needing to buy any package. These are the steps:
Step 1: Connect HedgeFlows to your Xero, Sage 50 or another popular accounting system. We automatically import your foreign currency invoices and calculate your risks and balances.
Step 2: Choose which purchase orders, invoices or bills you wish to convert and simply pre-book guaranteed exchange rates to lock their Sterling value with a few clicks.
Step 3: When time is due, exchange the currencies at pre-booked rates to get the exact Sterling values you were expecting. No surprise fees, risks or time wasted!
Because of our unique two-way integrations with the accounting software, the entire process becomes a well-coordinated, auditable workflow where contracts in foreign currencies can be seamlessly turned into Pounds Sterling, invoiced and paid in currencies and at the end - leave your cash balances where you expected them to be!
Please reach out if you are interested to find out more:
(1) British Business Bank: UK SME exporting trends: finance and trade (2020)