When looking to protect against currency fluctuations, forecasting exchange rates is never an exact science, especially in the light of ongoing Brexit talks, trade tensions and a global economic slowdown. However, in times of extreme uncertainty there are actions businesses can take to reduce these risks. Stephen Hubble, Chief Analyst at treasury management specialist Centtrip, outlines five of them:
1. Simplify your bank account structure: Adopt account structures that match your business flows and reduce the number of accounts you have where possible. Today’s technology like Centtrip’s allows you to simplify your bank account’s structures by holding one multi-currency account – with a bespoke “sub-account” hierarchy for centralised cash management – and provides you with tailored reporting options to view specific business activities and transactions in real time.
2. Free up your time and liquidity through automation: If you hold cash in different currency accounts, you may be exposing your business to increased risk of currency fluctuations.
Multi-currency accounts like Centtrip’s give you real-time visibility and control of your finances in one place. It also means your foreign exchange is no longer a separate task but is embedded into your end-to-end treasury management process and integrated within your bank account structure, helping you eliminate any idle currencies and reduce your aggregate exposure to fx volatility.
Another way automation can help is through direct integration of your accountancy software – Xero, Sage or QuickBooks – with banking or fintech platforms. This arrangement will help you better understand your treasury data and streamline your cash flows in different currencies.
Read the article in full: Start Your Business