Managing FX Exposure

Understanding Foreign Currency Risk ("FX")

Many businesses have exposure to overseas markers and deal in foreign currency. A real risk exists for businesses where financial performance is impacted by changes in exchange rates between currencies as highlighted in the chart below from our November Economic update blog.

This data shows how quickly currencies can move.

FX risk management strategies should be established if fluctuations in exchange rates can materially impact on business profitability. With a plan in place, the risk can be mitigated to ensure performance is focused solely on the core business activity, agnostic of the origins of currency used.

FX Support Strategies

When reviewing a business, a checklist for where FX support strategies may be needed includes these three main areas:

- Where a business imports or exports or cash flow is denominated in foreign currency
- Where a business holds assets or cash holdings that are valued in a foreign currency
- Where a business has lending denominated in foreign currency 

In these cases, a FX risk management strategy that includes support from foreign exchange experts goes a long way to provide a business owner with peace of mind.

Introducing Ebury Australia

Ebury is a new and capable entrant to the Australian finance community and an excellent FX provider for business with exposure to international markets. Ebury customers can also access a low cost trade finance facility.

Ebury are a global fintech specialising in Foreign Exchange & Unsecured Trade Finance which supports the working capital needs of internationally trading businesses.

What we like about Ebury

• History - founded in 2009, operating in 21 countries and 50% owned by Santander Bank – the 3rd largest bank in Europe.
• Market-leading FX rates
• Products that offer sophisticated risk management solutions (FX Forwards & FX Options)
• Flexibility with FX Credit lines supporting FX exposure of up to 5 years & Forwards with no up-front deposits
• Access to over 140 Currencies including Exotics
• Alternative Banking Solutions with in-country collection accounts in 35+currencies. Allows money to be collected globally without needing multiple banks
• A new and specialised mass-payments offering solving complex overseas payments in multiple currencies in one go

Product Review: Facility Type Trade Finance - Unsecured Line of Credit

For businesses needing an Trade Finance Facility, Ebury offers a limit up to $5,000,000 with a funding period of 150 days from the date an invoice is paid.

Realistic Costs, Security and Accessibility

The facility cost is Interest Only - charged for the line amount used with a minimum charge of 30 days.

Refreshingly, there are no Establishment Fees, Monthly Fees, Service Fees, Unutilised Line Fees, Exit Fees, non-use or early repayment fees.

Interest Rates are also flexible - From 0.10% to 1.00% per month depending on Currency, Credit Strength & Anticipated FX Flow.

The facility is offered as unsecured. Plus there is no title over goods, no charges over the business, no Personal Guarantees & no Caveats.

To be eligible, a new applicant must use Ebury for some of their foreign exchange requirements. Existing FX Clients are eligible to readily access Ebury’s Trade Finance solution.

More Information?

Contact your MCP Finance Partner to learn more