Initial Review and Setup

Valufin provides a fully outsourced Forex treasury service.  We work with you to determine your needs and structure the most appropriate service depending on internal systems, in-house knowledge, risk profile and the underlying business.

The spectrum of support services spans from a retainer based fully outsourced treasury to the negotiation of a single transaction.

Our services are offered to companies that have Forex exposures as well as individuals who need to buy foreign currency or convert foreign currency into local currency.

Forex exposures arise when a business is trading internationally, receiving or paying client monies in a different currency, purchasing or selling assets or investments, or in a variety of other circumstances.

Understanding your aims is the first step for Valufin to help manage your exposures. To learn more about your business, we will first gather information on the following:

Risk profile
Valufin will work with you to determine the risk profile of the business.  This will involve determining the risk appetite of the Board and the business which is reviewed by looking at internal and external factors.

Nature of the business
The inherent Forex risks will differ depending on the nature of business, and whether it is infrequent large ticket items, or frequent, small value transactions where the shipments change frequently creating an additional risk post establishment of the exposure.  Many companies span a mixture of activities.

Business industry
The industry will impact the risk evaluation and the approach to the hedging strategy.  This will include a review of the customer and / or supplier ‘chains’ to determine risks in changes developing post the creation of the exposures.  We consider the duration of the exposures, and the behaviour of competitors locally, nationally and internationally.  We will address secondary level risk of contract cancellation or alteration either by supplier or by a customer.  It is important to address the “what-if” scenario of a disaster style risk arising.  This needs to be evaluated and assessed so that it can be determined whether treasury management activities are tailored accordingly or what actions would kick in if a disaster were to occur.

Patterns of imports and exports
We review past patterns and discuss possible changes or developments likely in the future.  The patterns that we review include the mix of imports and exports, natural hedging that may exist, the duration of risk from placement of order or project commencement to ultimate flow of funds, whether a year occurs within the cycle and the potential revaluation impact this would have, the risks of change in value of the transaction, currency in question, shipment patterns, credit periods and possible delays in flows of funds.

Currencies
We review the home currency relative to the USD and the USD to all other currencies used and when and where this split should be considered versus the source currency and home currency.

The split via the USD is considered when the currency markets indicate that a review of the hedging of the different legs independently provides for better use of products and better management of exposures.  It usually creates greater flexibility in the portfolio and the ability to take advantage of spot market movements.

Policies and Procedures
We review the policies in place, determine if they are fit for purpose and where applicable these are enhanced, documented and approved. Implementation of policy in the format of specific procedures can be done with internal resources or, where logical, implemented via the workflow, assessment or alert driven frameworks of ComplySoft that Valufin can licence to it’s customers.

Procedures are reviewed, streamlined and implemented.  These can be frameworks that are easily and quickly designed for the exact purpose where actions need to be evidenced and oversight and accountability is desired.  Alternatively in-house systems are reviewed and support is provided to implement the changes.

Valufin will provide any required monitoring and reporting if this service is needed.

Currency Providers
Valufin will review the banks and brokers used to supply currency instruments.  The service and rates are addressed, the number of providers reviewed and where applicable recommendations of improvements or change are given.  This may involve improvements or changes in the relationship with existing providers and when applicable additional providers may be considered, the merits addressed and if approved, the process of adding a new supplier is supported.

Other Forex needs
These could involve regular market updates, market commentary, presentations to the Board, management, finance or audit/risk committee, evaluation of a specific project before placement of order or post order etc.

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