PLAN UP TO 12 MONTHS AHEAD

Forward contracts enable you to reserve a price for buying or selling currencies on a specific date in the future. The price you lock in is determined on the day you agree the amount and settlement date for the forward contract. Forward contracts are particularly useful for businesses that have future payments or receipts in foreign currency because they allow you to protect your budget and profit margins. They can be an important part of a company’s hedging toolkit because they remove any concerns over the unpredictability of currency markets, enabling you to focus on running your business.

Unlike spot contracts, forward contracts can be seen as a ‘buy now, pay later’ arrangement that helps protect you against adverse fluctuations in the currency market. Let’s say, for example, that you know your company needs to purchase goods in six months’ time and those goods will cost you $1 million. Now, the price of $1 million in sterling is entirely dependent on the GBP/USD exchange rate at the time of purchase.

You have done all of your costing, pricing and budgeting and have worked out that purchasing $1 million at the current exchange rate of 1.4000 (GBP/USD) will cost you £714,285. However, in six months’ time when you come to actually buy the dollars, the exchange rate is now at 1.3200 (GBP/USD). That same $1 million will now cost you £757,575. That represents a loss of £43,290 and could have a direct impact on your profits, margins and bottom line.

However, by using a forward contract you can lock in a rate for the future and remove any uncertainty over the cost of goods six months from now. Obviously, in the example above we have cited an instance where you stand to lose – and it’s certainly worth pointing out that the market could move in your favour and $1 million could cost you less in six months’ time. However, can your business afford to take that risk? The peace of mind that comes from locking in a rate for the future – and the certainty you gain as a result – makes the business of costing and budgeting much more straightforward.

HOW FORWARD CONTRACTS WORK

Easy as 1 2 3

  • 1. Signup

    Complete the online application form and provide the required documents.

  • 2. Discuss requirements

    We’ll help build a plan 12 months ahead of schedule and lock your rates in early

  • 3. Draw down

    You can access your fixed rates anytime drawing as many times as you like during the period

  • 4. Fund account

    Make a transfer to our FCA authorised partner bank account to fund your currency transfer.

FEATURES

Everything You Need

Hedging & Risk

We’ll help you hedge your positions and manage risk effectively ensuring large amount exchanges are safe and receive the most value.

140+ Currencies

With over 140 currencies available, the world is your oyster giving you global border-less access with some of the best exchange rates available.

24/7 Access

Make transfers, schedule payments, view account history and much more using our secure mobile App or website 24/7. Otherwise, give us a call.

Dedicated Manager

We’ll assign you with a dedicated manager who will be your single point of contact and will always give your business a priority service.

Let's Discuss Your forex needs

0330 124 3084

ALTERNATIVE SOLUTIONS

When you need it done sooner

Risk Management

Our tailored foreign exchange services allow you to manage currency exposures with a dedicated financial expert, using a bespoke strategy that will protect your margins and deliver certainty. By evaluating your business we’ll identify key risks and identify key solutions that will keep you ahead.

Spot Payments

If funds are available and you would like to exchange them immediately, you can enter into a Spot Contract. We’ll secure the best rate available at time of instruction and your currency will be available for onward transfer to any account, as soon as we receive your cleared settlement funds.

Limit Orders

If you have the time to wait for favourable market movements, you can choose to place a Market Order. To do this, you simply nominate your target exchange rate and then we’ll monitor the market’s movements and only execute the trade for you once your desired rate has been reached.

Stop-Loss

A Stop-Loss Order acts as a safety net mechanism, by allowing you to nominate a lower exchange rate that will minimise (“stop”) your losses in the event of a sudden fall in market value. You can simply instruct your ibanex account manager to buy or sell at the level you need protected.

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