Plan ahead and benefit from reassurance and certainty when you fix the costs of your international payments with a forward contract.
Phil Newton, Co-Founder of Offline Marketing - PSE
"moneycorp has enabled us to lock in our rates so we know exactly the amount we will receive once payments have been made.”
Types of forward contract
Why would I need a forward contract?
Forward contracts are often used as part of a hedging strategy to reduce the currency exposure of your business. As a business, there may be large invoices to pay or orders to make on a regular basis. With a currency forward, you can shield these payments from any exchange rate movements and mitigate the risk that the currency markets can pose. This is ideal if you’re looking to protect profits or maintain a tight budget.
A forward contract example would be when the GBP/EUR exchange rate was 1.31 on the 23rd June 2016, the day of the EU referendum. After the result, market uncertainty saw the rate initially fall to 1.23 the day after and fail to return to its pre-referendum high over the next two years. Had your business agreed a forward contract prior to this, you would have received an above market rate for up to two years of international payments.
What is the price of a forward contract?
A forward contract is just one of the range of free FX tools we offer at moneycorp, however we may require you to provide a deposit in order to secure your forward. This will depend on your facility agreement. You can discuss this with your dedicated Relationship Manager who can inform you whether or not you will need to provide a deposit, as well as the cost of your forward contract. In addition, they can talk you through our range of alternative products.
How long can I secure a forward exchange contract for?
The forward contracts we offer typically allow you to lock in an exchange rate for up to two years (this may require a deposit). With a moneycorp business account, you are able to agree a forward contract by speaking with your dedicated Relationship Manager. They can talk you through the process and agree an amount and duration for your contract, as well as answer any questions or queries you may have.