FORWARD CONTRACTS
Lock in Your Exchange Rates, Eliminate Uncertainty
Secure future exchange rates today and safeguard your business from market volatility.
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Lock in Today’s Rates, Secure Tomorrow’s Success
In the ever-changing world of currency exchange, uncertainty can impact your bottom line. Forward contracts offer a powerful solution, allowing you to lock in today’s favorable rates for future transactions. This safeguards your business from market fluctuations, ensuring predictable costs and protecting your profit margins.
Simple & Effective Risk Management
A forward contract is an agreement to buy or sell a specific amount of currency at a predetermined rate for a future date. This allows you to secure today’s exchange rate, even if you don’t need the currency immediately.
Create Currency Confidence: Lock in favorable exchange rates today for future transactions, eliminating uncertainty and enabling proactive financial planning.
Hedge Against Market Fluctuations: Safeguard your business from adverse currency movements and potential losses.
Flexible Timeframes: Secure rates for transactions up to 12 months in advance, with the option to make or receive payments earlier if needed.
Budget Control: Avoid unexpected costs and budget overruns due to fluctuating exchange rates.
Fix Future FX Costs: Gain peace of mind by knowing your currency exchange costs for the year ahead.
Multi-Currency Support: Lock in rates for transactions involving 19 currencies, including all major currencies.
Case Study: Protecting Profits with Forward Contracts
A medical company needs to purchase $200,000 worth of goods from a US supplier in three months. Concerned about potential fluctuations in the GBP/USD exchange rate, they decide to book a 3-month forward contract at the current rate of 1.40.
Illustrative Calculation
- GBP/USD rate: 1.40
- Client Sells: £142,857.14
- GBP Client Buys: $200,000.00 USD
Even if the exchange rate drops in the next three months, the company is protected and can still purchase the goods at the agreed-upon price, safeguarding their profits.
Secure Your Future Exchange Rates Today
Contact us to discuss your FX risk management needs and discover how Forward Contracts can benefit your business.
We’re more than just money transfers.
At Provision Currency, we're more than just a foreign exchange provider. We're your strategic partner, dedicated to making global transactions simple, secure, and successful. Our partnership with a world-leading technology platform allows us to offer competitive, bank-beating exchange rates and lightning-fast remittance services, ensuring your money moves efficiently across borders.
We understand that every client is unique. That's why we offer tailored FX solutions for businesses of all sizes, from large corporations to ambitious SMEs, as well as private individuals with diverse financial needs. Our team of experienced account managers is always on hand to provide expert guidance and support, ensuring you have the tools and knowledge to navigate the complexities of the global currency market.
Data
Protection
ProVision Currency and The Currency Cloud Limited is registered with the UK Data Protection Act.
Client’s personal data shall be obtained only for specified and lawful purposes.
Segregated Client Accounts
All funds are sent to segregated client accounts held with our banking providers. The client accounts are ring-fenced from the company’s funds, and therefore protected from the unlikely event of any financial difficulties within the company. Clients money always stay separate to any of our liquidity.
Safeguarded Bank Accounts
The Client’s accounts are ring fenced from the company’s funds so your money remains protected at all times. Our partners stop safeguarding your funds once the money has been paid out.
Data
Security
Certified under ISO/IEC 27001:2013, the international best practice standard for information security management. Registered with FinCen in the United States and authorised in 22 states to transmit money
Need Help?
Find Answers Here
We’re here to help! Browse our FAQ section for answers to common questions about our services, fees, and security measures. If you need further assistance, don’t hesitate to reach out – our team is always happy to help.
What is the minimum and maximum contract size for Forward Contracts with Provision Currency?
We offer flexible contract sizes to accommodate various business needs. There’s no strict minimum, but the maximum contract size may depend on the currencies involved and your specific requirements. Reach out to your dedicated Account Manager for personalized guidance.
Can I cancel or modify a Forward Contract once it's booked?
While Forward Contracts are designed to provide certainty, we understand that business needs can change. Depending on market conditions and the specific terms of your contract, there may be options to modify or cancel, but this could incur fees. Contact your Account Manager to discuss your specific situation.
Are there any upfront costs associated with Forward Contracts?
We can offer businesses 0% deposits for businesses. Please discuss with your account manager.
Can I use Forward Contracts for both buying and selling currencies?
Yes, Forward Contracts can be used for both buying and selling currencies, providing flexibility to manage your FX exposure in either direction.
What is a forward contract in foreign exchange?
A forward contract is an agreement to buy or sell a specific amount of currency at a predetermined exchange rate on a future date.
How can forward contracts benefit my business?
Forward contracts offer several advantages, including:
- Budget certainty and predictability
- Protection against adverse currency movements
- Reduced risk and improved financial stability
When should I consider using a forward contract?
Consider using a forward contract when you have upcoming international payments or receivables and want to protect your business from potential currency fluctuations. They’re also useful for businesses operating in volatile markets or with long-term currency exposure.
What are the risks associated with forward contracts?
While forward contracts offer protection against downside risk, they also limit your potential upside if the market moves in your favor. It’s essential to understand the terms and conditions of the contract and consult with an FX specialist to assess its suitability for your needs.
What is hedging in foreign exchange?
Hedging is a risk management strategy used to offset potential losses from adverse currency movements. Forward contracts are a common hedging tool, along with options and other derivatives.
How do I calculate the potential profit or loss on a forward contract?
The potential profit or loss on a forward contract depends on the difference between the agreed-upon forward rate and the actual spot rate at the time of settlement.
What are the alternatives to forward contracts for managing currency risk?
Other hedging tools include options, currency swaps, and natural hedging strategies like invoicing in your home currency.
How can I learn more about forward contracts and other FX risk management tools?
Consult with an FX specialist, attend webinars or seminars, or explore educational resources online. Our team at Provision Currency is always available to provide guidance and support.