One of the most pervasive issues that we come in contact with are clients who get worried when offered hedging strategies.
“Oh, I don’t need anything like that,” some say. “I’m just a little guy – I don’t send enough,” is another common response.
The fact of the matter is that hedging isn’t complicated, but rather an important tool to help protect your profits from risks associated with currency market fluctuations and once someone understands it, the basics of hedging are accessible to everyone.
What is Hedging
If you came here for gardening, you are going to be a little let down. Hedging, at its core, is a means to limit risk of an investment. In context of foreign currency payment, this is simply a measure meant to limit the risk of an outstanding payment, either inbound or outbound, to protect profits.
Hedging, as a tool, is meant to take the market risk out of the market. For example, in the first half of 2017, the dollar index, which measures the dollar’s value relative to a number of foreign currencies, fell by nearly 10%. While there are a number of different methods and tools to hedge risk, it’s important to have a goal or strategy you would like to achieve when making your payment.
How to Achieve Your Goals
It’s important to communicate your goals with Tempus or your payments provider. If your provider knows the goals you’d like to achieve, they can work with you on a strategy to best achieve those goals.
Either with your account manager or through the Tempus Online portal, there are a number of ways that this can be achieved. No matter the size of the payment, no matter the issue, hedging something that can help you mitigate the risk of your payments. It can take many different forms but always designed to make your life easier and make payments more manageable and less risky.