4 July 2008
Almost all companies have at least some foreign currency payables or receivables and are therefore exposed to exchange rate movements. Changes that occur within just a few weeks can significantly impact profitability.
In certain circumstances, active management of this foreign exchange risk can be crucial to a company's existence. There are many examples of small and large companies being forced out of business by adverse currency movements.
World First offers a number of products to help reduce and manage currency risk:
This is one of the most frequently used contracts, where currency settlement takes place 2 business days after the spot contract has been entered into. Once your funds have cleared, World First transfers the pre-agreed currency amount to your requested bank account.
This type of contract is ideal if you simply wish to make a payment within the next few days.
With certain currency pairs, World First can undertake foreign currency transactions and settle them on the same day. The currencies in which we can do this are: sterling pound to US dollar, Euro or Canadian dollar. You will need to send us money by CHAPS to make a same day payment into our account by 14:00. Once the funds have cleared, World First will make a same-day payment into your requested bank account.
This type of contract is ideal if you wish to make an urgent payment.
A forward contract guarantees a foreign exchange rate for a future date irrespective of currency movements between the deal and settlement dates. No payments are made until the settlement date except for any deposit required (see below). You can fix a forward exchange rate for any period from 1 week up to 2 years.
A deposit of 2% to 10% of the transaction amount is required for a forward contract.
This type of contract is ideal if you want to fix a sterling amount now, but will not be making immediate payment.
Also known as a "time option", this type of contract is similar to a forward contract but allows you to make and receive the pre-agreed payments early if required.
This type of contract is ideal if you know you need to purchase a foreign currency, wish to fix the exchange rate now but are not sure of the exact settlement date.
