Why hedge against currency risks?
Currency risks occurs due to the time lag between order and payment dates, which are usually weeks or months apart. Let’s take a simple example:
Your company orders goods from Sweden in November 2016 for 1.000.000,00 krona. At a 10.02 exchange rate you assume you will pay around 100,300.00 Euro. You are planning to sell in Germany with a profit margin of 10%.
Your Swedish partner fulfils the order. The EUR/SEK exchange rate shifts slightly to 9.46. You receive your order and the bill for 1,000,000.00 Krona.
You have to pay your bank roughly 106,000.00 incl. fees. This is 6,000 Euro more than expected. In effect you lost more than 50% of your profit margin through unhedged FX risks. Through Forexfix you could have hedged the currency risks for this transaction in 2 mins - your profit margin would have been untouchable.
Why use Forexfix?
Book guaranteed exchange rates online within minutes
Infinite transactions without minimum volume or base fee
True mid-market rates and a lower commission than banks
How exactly does the application work?
Upload your ID, and we do everything else necessary for the compliance check.
Specify by which date your counterpart is expecting which foreign currency payment.
With one click you get a guaranteed future exchange rate, with another one you book it.
You transfer the down payment now, and later the rest, at the guaranteed rate.
You do not have to worry about bad exchange rates cutting into your profit margin.
How does Forexfix hedge currency risks?
The financial products come from our partner Currencycloud Ltd, an established payment engine in the FX market.
Live market rates and automated placement of orders is provided through API technology.
In most cases we use deliverable forwards, bank products usually only sold offline, for high fees and to very big clients.