- WHAT IS THE VALUE OF A CUSTOMER?
- DOES CONTENT MARKETING WORK?
- WHAT IS THE DIFFERENCE BETWEEN A BRAND, BRANDING, A PERSONAL BRAND AND A COMPANY/PRODUCT NAME?
- WHAT IS GROWTH HACKING?
- HOW MANY « P » CAN BE FOUND IN THE MARKETING MIX?
- THE CUSTOMER VALUE CHAIN
- HOW CAN YOU PROTECT YOUR UNIQUE PRODUCT OR SERVICE?
- CONFERENCE ON FINANCING - MAY 2, 2017
- WHAT IS DRIP PRICING?
- WHICH AMOUNT SHOULD YOU CHOOSE FOR YOUR PRICES?
- DETERMINING YOUR HOURLY RATE BASED ON THE VALUE YOU THINK YOU HAVE
- IS LOWERING YOUR PRICES A GOOD IDEA?
- TO OFFER OR NOT TO OFFER FINANCING?
- HOW TO PROTECT YOURSELF AGAINST EXCHANGE RATE RISKS
- WHEN IS A GOOD TIME TO INCREASE YOUR PRICES?
- DEMAND BASED PRICING
- WHAT IS A LOSS LEADER?
- HOW TO ORGANIZE A DRAW THE RIGHT WAY?
- HOW TO HAVE REMOTE EMPLOYEES
- IS IT GOOD TO BE FIRST IN A MARKET?
- THE THREE TYPES OF CUSTOMERS
- EXPORTING TO MEXICO - QUERETARO REGION
- DEFINING BUSINESS SUCCESS
- ARE YOU USING REBATES? WATCH OUT FOR THESE
- IS THE CUSTOMER ALWAYS RIGHT?
- EXPORTS AND QUEBEC COMPANIES
- COWORKING SPACES
- YOUR PLACE OF BUSINESS AND INTERNET
- WHY IS SOCIAL MEDIA IMPORTANT FOR YOUR BUSINESS?
- HOW TO USE FREEBIES
- WHAT IS THE MAGICAL FORMULA FOR HAVING SUCCESS IN BUSINESS?
- DO YOU HAVE EXPERIENCE IN MY FIELD?
- WHEN CAN WE STOP OUR MARKETING?
- WHAT IS A CALL TO ACTION?
- WE ARE ALL SALESPEOPLE; HERE'S HOW TO GET THERE
- HOW CAN MARKETING AND SALES COLLABORATE?
- HOW TO SELL MORE TO YOUR EXISTING CLIENTS
- WHAT IS CROSS-MARKETING?
- WHY SHOULD I SEGMENT?
- WHO IS RESPONSIBLE FOR MANAGING YOUR COMPANY'S IMAGE?
- HOW TO CHARGE FOR YOUR PRODUCTS / SERVICES?
- HOW TO DEFINE YOUR PRICING STRATEGY: PRICE POSITIONING
- HOW TO DEFINE YOUR PRICING STRATEGY: MARKET PRICING
- WHAT PRICE SHOULD YOU SELL AT? - COST-BASED PRICING
- WHAT IS A PRODUCT?
- HOW TO MARKET YOUR NEW BUSINESS?
- IS BUYING A FRANCHISE A GOOD WAY TO START A BUSINESS?
- HOW SOCIAL MEDIA HAS CHANGED WORD-OF-MOUTH
- HOW SOCIAL MEDIA HAS CHANGED PUBLIC RELATIONS
- WHAT IS BRANDING?
- WHY INCREASING SALES IS NOT THE SOLUTION
- HOW TO SELECT YOUR COMPANY NAME?
- WHY HAVING A WEBSITE IS ONLY THE BEGINNING?
- WHAT IS MARKETING?
- HOW TO MAXIMIZE THE VALUE OF YOUR SOLE PROPRIETORSHIP BUSINESS
- WHY SELLING IN MEXICO?
- LOW COST MARKETING INITIATIVES
- WHY IS PRODUCT DIFFERENCIATION IMPORTANT?
- hOW TO PRESENT OUR COMPANY
- WHAT IS THE DIFFERENCE BETWEEN MARKETING AND PUBLICITY?
- 50% OF YOUR ADVERTISING BUDGET DOES NOT PRODUCE AS MUCH AS THE REST
- RIGHT SELL AND OVER DELIVER
HOW TO PROTECT YOURSELF AGAINST EXCHANGE RATE RISKS
Are you ready to export your products or services? Do your transactions take time? Is there a delay between sales and payments? Does the exchange rate between your currency and the country of your client(s) vary greatly? Is your profit margin thin? Does your customer insist to be billed in the currency of his country? You’d better protect yourself.
I must confess that I'm not as familiar as I would like to be with this topic, mainly because I have never used this instrument before. So I do not know how this works exactly, but I think it's important that you are aware that it exists. I found out about these protections thanks to one of my export clients, who was buying them to protect himself against the currency risk involved in trade between Mexico and Canada. The transactions between the two countries were in US dollars. So the protection was for the variation in the exchange rate between the Canadian and US dollars, even if the customer was Mexican.
To put this in context, imagine that you sell a product to a customer in a given country and that this customer pays you according to your agreement some 30-60 days later. In addition, exchange rate fluctuations between both your countries are strong. So if the selling price on day 1 is X in the buyer's currency (which is often the case) the price will remain constant. But if the buyer's currency goes up in relation to your own, the money you will receive will be less than what you charged in the beginning.
The best way to protect yourself would be to invoice in your own currency. That means that the currency risk will be bared only by the buyer. But not all customers want to go that route, either because you are in a very competitive environment and the buyer has many options to chose from, either because there are no protection instruments in the buyer’s country, or because the transactions are made in an internationally recognized currency (as in the example of my client who used US dollars to make the transaction even if the customer was Mexican), or for any other reason.
Under these circumstances, know that there are instruments that can protect you. According to my quick research, financial institutions offer protections revolving around 3 options:
- Exchange contracts allow you to set a predetermined price on the basis of which your company is required to buy or sell a currency on a date of your choice. This fixed price will allow you to protect your income, profit margins or expenses.
- Currency forward contracts allow you to agree on a pre-determined price on the basis of which a particular currency will be bought or sold at a later date. You can enter into a contract more rapidly if it is to your advantage.
- Currency option contracts allow you to buy or sell currencies at a pre-determined exchange rate for a pre-determined period of time.
Although these are advantageous tools to counter the risks associated with exchange rates, there are complex tax and accounting treatments for each of them. Ask your accountant about the impact on your business when using these instruments.
If you have more information, questions or comments on this subject, please do not hesitate to contact me.
Stéphane Elmaleh-Riel, B.Ed., MBA