For a business, every little expense needs to be accounted for, every transaction needs to be transparent, and every movement ought to be planned. However, when your business payments move across borders, time, fees, and even the final amount it reaches after conversion can remain a mystery. Generally, multi-currency payments are often very unpredictable, given …
For a business, every little expense needs to be accounted for, every transaction needs to be transparent, and every movement ought to be planned. However, when your business payments move across borders, time, fees, and even the final amount it reaches after conversion can remain a mystery. Generally, multi-currency payments are often very unpredictable, given factors at play such as multiple payment systems, different jurisdictions, complexity around currency conversion, timing and foreign exchange exposure.
A payment you receive from an overseas company could be reduced by 20% through fees, FX market movements and markups. That 20% could cover a week of your employees’ salaries. The unpredictability of multi-currency payments for businesses can affect not only your balance sheet but, for a startup or SME with a limited budget, can also severely impact day-to-day operations and financial planning. The result?
Rather than trying to forecast every exchange-rate movement, businesses can bring certainty to their multi-currency payments through these practical steps.
First, plan things in the right direction. Of course, you can’t manage what you haven’t mapped; therefore, start by knowing the market so you can see a clear picture of currency rates and risk, instead of leaving things to fate.
Keep an eye on: which currencies you’re receiving, which you’re paying out in, how much volume moves through each, and when those payments typically fall due. The objective is not to predict the exchange rate perfectly; it is to understand the business’s underlying currency requirements before transactions become urgent.
This means agreeing with your client or supplier to price and settle the transaction in a currency that is less exposed to sharp fluctuations and works better with your own cash flow.
This won’t always be possible; a supplier or client with pricing power may insist on their own currency. But where you do have leverage, pick the stable currency. This can make the final cost of the transaction easier to anticipate and reduce the impact of sharp currency movements.
If you have flexibility on when a payment is made, use it: avoid converting large amounts during periods of known volatility (around major economic announcements, for example), and where possible, spread large conversions across several smaller transactions rather than one large sum at one time.
Secondly, everyone should avoid treating multi-currency payments for businesses as a last-minute decision. Planning ahead gives you more options over when and how to convert, rather than being forced to exchange currency at whatever rate is available when a payment becomes urgent.
No matter how good you are at forecasting budgets, predicting exchange rates, and planning each payment, international transactions are always risky; therefore, one thing that can save you from loss is ‘a currency buffer’. In simple terms, this means a cash reserve held specifically to absorb short-term rate swings.
This stops a sudden dip in the FX market from becoming a cash flow emergency for your business. The right buffer size depends on your exposure and how volatile your key currency pairs tend to be.
It is important to note that holding excessive balances can create a different problem: the business becomes exposed to movements in the value of currencies it does not actually need to hold. Therefore, balance is important.
Linea Global handles multi-currency settlement alongside spot trades, forward contracts, market orders and rate alerts, so businesses can pick the right tool for whatever the transaction actually needs, whether that’s speed, certainty, or just keeping an eye on the market until the timing’s right.
It really depends on what you’re paying for. For one-off or urgent payments, a spot trade gets the money moving straight away. For recurring payments where you want certainty, a forward contract locks in your rate ahead of time. Contact us to learn about FX solutions that best suit your needs.
Generally, fees that apply to multi-currency transactions are: FX conversion fees, exchange-rate markups, transfer fees and intermediary or receiving-bank charges.
Note: Exact costs depend on the currencies, payment route, provider, and transaction type.
Yes. Most FX providers offer forward contracts to SMEs too, often with fairly low minimum amounts.
