As companies go global, currency management becomes even more crucial as it translates directly to the bottom line. Having an effective currency management strategy is key, says Kristoffer Jansell, senior sales manager at Nordea Markets and automation & digitalisation specialist.
It’s not just struggling businesses that are affected by currency fluctuations. Unfavourable currency movements affect all companies involved in international trade.
That’s why having an effective currency management strategy is vital – even for the companies that are doing well, according to Kristoffer Jansell, senior sales manager at Nordea Markets. When talking to customers about currency management, Jansell always emphasises five things. He shares those tips here on Open Insights.
1. Going (g)local
Who wants to do business with a cumbersome company? No one. Receiving and sending payments in local currency is a great way to turn your company into a flexible and accommodating business people want to do business with.
Customers will know how much they’re paying, which will simplify the purchase and decision-making process, explains Jansell.
In addition, if you are an importer you will usually also get better prices from your suppliers if you pay them in their local currency, he adds.
2. Avoid unnecessary risk
It’s important to understand how big an impact currency movement can have on your margins and results.
Start by doing a simple simulation: What would happen if your production cost increased by 10% but your sales figures stayed the same? Is that a big business risk for your company? If so, avoid unnecessary risk by adding FX solutions that can help you secure your margins.
Your bank can help you choose and implement the ones most suited to your business. Many of these processes can also be handled automatically using FX solutions, says Jansell.
3. When in Rome
Before doing business in another market, it’s important to understand how things work in that country and culture. Every market has different traditions, regulations and ways of operating. Do your research before taking your business abroad, and be prepared to ask for help. Don’t be shy – there are probably many companies who have faced the same questions before.
4. Get rid of unnecessary manual tasks
Manual tasks are not only a drain on time, but they can also lead to costs. Human involvement means human error, along with the related expenses. Using the latest automation solutions can be a great way of eliminating unnecessary manual tasks and freeing up time for more important jobs.
Trading $1 or €1 million takes the same amount of time, says Jansell, underscoring that you shouldn’t automate all your FX tasks. Sometimes human interaction is required; however, automation can help streamline your processes. Here are 5 reasons to automate your work processes and avoid unnecessary manual work.
5. Talk to your banking partner
Talking to your bank about issues, opportunities and difficulties can help make your business operations more hassle-free. Don’t hold back! Partner up with your bank. Together you can achieve your goals, such as going global.
Nordea’s automated currency robot, AutoFX, is a great example of how a partnership between a customer and its bank can make day-to-day business easier. Nordea developed AutoFX based on the customer’s need for a hassle-free and time-efficient FX solution. The result is a rule-based solution that automates your FX handling.
Need help with your currency management?
To evaluate your opportunities for a more profitable currency management, visit your nearest Nordea office or contact us via the phone numbers and e-mail addresses below.
Phone: +46 8 407 9499
Phone: +45 3343 9786
Phone: +47 2248 7760
Phone +358 9 369 50460
A currency management strategy is vital
An effective currency management strategy should include paying and receiving in local currency.
Your currency management strategy should also aim to minimise your currency risk so that your core business is protected from external factors, according to Jansell.
He also recommends using simple and effective FX solutions. If you are not familiar with automated FX solutions, don’t miss this article about why FX automation is the new kid on the block.
Finally, Jansell stresses the importance of knowing the cultures, customs and regulations of the countries you are doing business in.
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