“Multi-currency system”

definition

The concept of a multi-currency system in the corporate environment refers to software solutions that enable international businesses to buy and sell currencies in order to finance their international operations.

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Multi-currency systems for international businesses

Companies operating at a global level often carry out business in several currencies other than their functional currency. Companies in the Eurozone, for instance, might have revenues in pounds, Swiss francs and/or Swedish krona if they export their products to other European countries and costs in US dollars if they import from Asian producers or if they rely on a global supply chain.

For many businesses, managing cross-border payments and hedging exposure in the different currencies they work with may become a burdensome process, requiring substantial processing and reporting efforts.

In these cases, automatic multi-currency management systems like Dynamic Hedging may help to increase process efficiency in three main areas:

  • Payments: Simplify transaction management by processing all payments from a single platform to pay suppliers and subsidiaries and handle inter-company flows.
  • FX risk: An automated FX risk management solution monitors the FX market and the evolution of FX exposure and executes hedging operations according to a predefined plan to protect the company from the impact of exchange-rate fluctuations.
  • Reporting: The system produces automatic reports with the details of all foreign currency operations and each hedge’s status to simplify accounting tasks.

The most efficient multi-currency systems simplify FX management tasks and help to protect the company’s profit margins while minimising manual workload. This allows the treasury team to focus on more value-added tasks.

 


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