Why you should hedge your cashflow with ABCM™
Cashflow is the lifeblood of every business, and a company’s stability is ultimately determined by its ability to sustain a positive cashflow for the long term. Keeping a positive cashflow, where your income is higher than your expenses, can take a negative turn if you don’t consider exchange-rate risks in managing your currencies.
Cashflow hedging is a form of insurance policy, protecting a company's cashflow against variable factors. Multi-currency and cross-border activities always risk going over budget due to volatile currency markets, which can eventually hinder your efforts to maintain stability and plan ahead.
Your business depends on future cashflows and must have enough cash on hand to sustain operations, especially if it has overseas operations. It is difficult to come up with a hedging strategy that takes cashflow projections and market variables into account especially when your bank offers expensive hedging transactions that are not always suitable for you.
In this blog, we’ll discuss how utilizing the ABCM™ platform streamlines the planning, execution, and assessment of hedging activities into a unified process, helping you protect your business from future adverse exchange rates and avoid the toll of market trends surprises.
The ABCM™ Advantage
Okoora’s Automated Business Currency Management enables you to confidently predict your incoming and outgoing cashflow and save on currency transactions and conversion rates. The ABCM platform provides you with a quick path to opening local bank accounts virtually anywhere, sending and receiving fee-less transfers, and utilizing the funds in the regions where they are needed.
You can gain real-time insights into how your business interacts with currency markets, discover the blind spots in how you conduct your global financial operations through automated simplicity, analyze currency exposure, and track cross-border cashflows with forward-looking vision.
How Does ABCM™ Simplify Cashflow Hedging?
Cashflow hedging helps businesses prepare for unforeseen events such as an unexpected increase in raw material costs or changes in the foreign exchange rates if it operates overseas. Insufficient cashflow limits your growth potential and may even put your business at risk. ABCM™ stabilizes your currency transactions workflows and helps you make informed decisions.
As a business owner, you strive to ensure you have enough money to pay your expenses. But existing cashflow management tools are typically complex and do little to enhance predictability. With ABCM™, you can avoid unpleasant surprises by managing payments, locking favorable exchange rates, making short-term deposits, and reducing the harmful effects that market instability can have on your business. Stay up-to-date with where the currency markets are and how they impact your cashflow over one integrated cloud-based platform.
ABCM’s hedging toolkit is powered by smart hedging methodologies and by a wizard that enables you to take the right action at the right time in order to minimize the uncertainties in juggling multiple currencies.
Protect your equity from future unfavorable exchange rates, with ABCM’s balance-sheet hedging module and keep your projects aligned with budgeted exchange rates using the comprehensive project hedging module.
Conclusion
The main purpose of hedging or risk management strategies is to reduce exposure to risks associated with changes in currency exchange rates. It’s a financial strategy used to deflect sudden market changes that impact your business’s cashflow. An informed hedging strategy enables you to increase cashflow predictability and avoid unnecessary losses.
Worried about keeping your cashflow afloat? Automated Business Currency Management shelters you from currency storms, and allows you to manage payments, currency risks, and cashflows across multi-national bank accounts over a centralized cloud-based platform.