When considering a company like VFP Exchange there are some obvious questions that come to mind. Here are answers to the most common ones and we would be pleased to address others you may have.
               If your particular query isn't answered here, for quick response please send us your questions via e-mail, or by fax – we're always happy to help.

1.   What can VFP Exchange do for me that my bank can't?

2.   How does VFP Exchange effect savings?

3.   What is the magnitude of the savings?

4.   Explain the yardstick by which to evaluate effectiveness?

5.   When can one expect to see the benefits of this service?

6.   What are the contract terms?

7.   What is meant by 'being pro-active'?

8.   How are the fees structured?

1.   What can VFP Exchange do for me that my bank can't?
Your bank's primary function is to carry out your instructions to the best of its ability. Banks offer a range of services for you to select from and charge a fee for their service. Your bank is not equipped, nor is it their business, to know the detail of each order you have placed on suppliers or that has been received by you from customers. They do not have the staff to become involved in your business on a day-to-day basis. In addition your bank's staff is not trained in the skills needed to advise you on costing methods, payment credit terms, accounting methods, tax implications, etc. They are there to assist you in your banking requirements and to offer advice in the light of limited information. Our service ensures that you select the correct service from your bank to cater for the job in hand. We are able to advise you on all aspects of your business involving forex. These areas include, product costing, spot and forward rate management, accounting for forex and the tax implications of forex on trading and capex imports or exports.

2.   How does VFP Exchange effect savings?
Savings are effected in:
           a) Bank Margins
Banks charge various rates for services and for time employed in carrying out your instructions. These fees are either in the form of a flat Rand value, a percentage of the transaction value or a margin based upon what the market will pay. In this way they do not differ from any other commercial enterprise. We are able to effect savings in bank margins by selecting the correct service for your company, by streamlining the transaction, reducing the time the bank spends handling your instruction and by obtaining market related quotations for each transaction.
           b) Choice and Timing of Activities
There is usually more than one option available to a company when handling an exposure. It is important to know the options available and to be able to evaluate which is best for the company in terms of risk and costs. The market is dynamic and changing constantly. When currencies move in favour of the customer, it is necessary to react quickly. Our service evaluates options available to the customer on a daily basis, and also ensures that the customer remains up to date on new instruments. We monitor the rates continuously throughout the day, and are therefore able to pick the time of activity optimally.
            c) Duration of Forward Contracts
As mentioned, the period for which cover is taken is a function of its cost. Savings are achieved by ensuring that the term of the contract optimises the interest differentials of the various periods, and any expected movements of these differentials, as well as the expected movement in the spot rate.
            d) Opportunity Management & Insurance Base of Cover
A Company should not be blind to alternative opportunities once cover has been established. Instead a company should decide on a minimum cover level it is prepared to accept and then manage alternatives on an ongoing basis. This strategy also works for a company on 100 % cover level that has ongoing business in a currency.

3.   What is the magnitude of the savings?
The amount saved is dependent upon the sophistication of the systems operating in the company at the time of employing VFP Exchange. However, savings of between one and two percent of turnover should be achievable if the service is fully supported within the company.

4.   Explain the yardstick by which to evaluate effectiveness?
Our reporting systems provide a measure of the effective rate against a conservative fully covered strategy; against the company cost, and against the spot rate at the time the transaction was finalised. The measurement is conservative, as it does not take into account any savings in bank margins that have been realised.

5.   When can one expect to see the benefits of this service?
Benefits become obvious within the first month of operation. The first financial benefit will be a reduction in bank margins resulting from our dealing on your behalf and effecting the savings as discussed in question 2. You will also see benefits in the flow of information and in accounting issues. By the end of the fourth month most benefits will be obvious and you will be able to quantify the gains.

6.   What are the contract terms?
We work on an initial six-month period to establish the service and become totally familiar with your company. Thereafter, we enter into a contract on a two-month notice period.

7.   What is meant by 'being pro-active'?
Because we are constantly monitoring the markets and relating this information to your company's position, we are managing the situation instead of reacting to market forces or the timing of documents crossing your desk.

8.   How are the fees structured?
We consider the amount of time it will take to run the account and charge a fee accordingly as opposed to taking a percentage on all transactions as is the norm in the market.