How Currency Risk Impacts Your Business - And What You Can Do About It

If your business deals with international customers or suppliers, even occasionally, currency movements can quietly eat into your profits and complicate planning.

For small and medium-sized businesses (SMEs), foreign exchange (FX) risk isn’t just a problem for multinationals. Even modest swings in exchange rates can change the value of a deal by thousands. But with the right approach, it’s something you can manage, and even turn into a strength.

What is Transaction Risk?

Imagine an Australian business agrees to buy $100,000 worth of equipment from a US supplier, with payment due in 60 days. If the AUD weakens against the USD before payment is made, that same purchase could end up costing thousands more than expected.

This is known as transaction risk. It’s the risk that exchange rates will move between when you lock in a deal and when the money is actually paid. It can affect both incoming and outgoing payments—and it often hits hardest when least expected.

Currency swings like this can:
- Shrink your profit margins
- Make cash flow harder to predict
- Undermine your pricing strategy
- Complicate financial planning and budgeting

Simple Ways to Stay in Control

You don’t need to be a currency expert or have a large finance team. Here are three practical ways to manage risk:

1. Use a Spot Transaction to Lock in Today's rate

If you’re ready to pay now, a spot transaction allows you to exchange currencies at today’s market rate. This locks in certainty and removes any risk of adverse movements before the payment is made.

2. Fix a Future Rate with a Forward Contract

A forward contract lets you agree on an exchange rate today for a payment you’ll make (or receive) in the future. It gives you clarity on future costs and helps keep your budgets on track.

3. Use Smart Technology

Modern FX platforms give you a clear view of your currency exposure and provide tools like rate alerts, so you're immediately notified when the market moves in a way that could impact your costs or margins. They also help connect currency decisions with your broader financial strategy—so you're not reacting, you're planning.

Future-Focused, Globally Aware

At Bretton, we support growing businesses around the world with simple, effective ways to manage currency risk. Whether you’re buying from the US, selling to Europe, or just starting to trade internationally, we believe currency clarity should be part of your growth toolkit.

Want to take control of your currency risk?

At Bretton we help you build a plan that fits your business, your market, and your goals.