Before the recession took hold and currency fluctuations became volatile, businesses involved with import or export should have fixed their exchange rates with a forward contract.
“A company we work with exports to the US and receives payment for its products in US dollars, which then needs to be converted into sterling,” says Robin McEwen, managing director at Foremost Currency Group.
“It fixed a rate at 1.46 using a forward contract, achieving £171,232.87 for $250,000. The market peaked at 1.7 just four months later. If they had not ‘forward sold’, they could have been faced with recouping only £147,058.82.”
Real Business wonders how many entrepreneurs out there are kicking themselves…