| VFP Exchange and Exchange Concepts offer services in treasury outsourcing and software.
Outsourcing for companies
Foreign Exchange for Private Individuals
Software
OUTSOURCING VFP Exchange offers treasury services to companies who, for one reason or another, are not able to profitably operate a treasury function within their organisations. VFP Exchange offers the following services to its clients on a contract or an hourly basis.
Consultation
Procedure Analysis
Portfolio Analysis
Risk Analysis
Strategies to reduce risk
Risk in Currency Markets
Advisory Service
— Monitoring of the currency rates
— Monitoring of Positions
— Trading Service Consultation
The directors and staff at VFP Exchange have in excess of twenty years experience in foreign currency management. In this time we have had dealings with several hundred companies and have been faced with the majority of difficulties experienced by importers and exporters. Our experience ranges from basic procedure analysis to the development and installation of complex integrated software systems for major corporations. This diverse experience, together with a thorough knowledge of the exchange control regulations and the various hedging instruments offered by commercial and merchant banks, is available to our clients. VFP Exchange will undertake the following investigations on behalf of the client: - Procedure Analysis
Time is a critical element in the management of foreign currency. Any delay in the communication of information relating to foreign currency transactions could have serious consequences on the rates being obtained and hence the profitability of the company. We will review the procedures used within a company. In this analysis we review communications between various people and departments within the organisation in order to determine the efficiency and effectiveness of the movement of information and documentation. This includes a review of the documentation being used and the use made of this documentation by each recipient. We also investigate the nature of the information being held by the company with regard to the value, timing and costing of foreign currency transactions. This includes information being sent to and received from banks. Without adequate information it is difficult for management to evaluate procedures and increase the effectiveness of currency management. By the same token, an over supply of data can be costly and confusing and could lead to needed information being lost in the pile of paper. Portfolio Analysis
VFP Exchange will review the client's current portfolio of hedging instruments and commitments to determine the current position with regard to risk and effectiveness of cover. In doing this we consider the suitability of the existing hedging instruments in the portfolio as cover for current payments and receipts. Unsuitable instruments, which may be changed without a detrimental effect on company cash flow, are highlighted and suggestions made as to what may be done to improve their effectiveness. In all cases company cash flow and profitability is the prime consideration. We evaluate the suitability of the types of instruments currently used in relation to the nature of the client's business and the periods for which hedges are established. Imports and exports are considered individually and in total so that the company can take advantage of any natural hedges where possible. Where necessary we will suggest other methods of hedging and the use of alternative financial products. Risk Analysis
Risk in the existing portfolio
Here we determine whether or not the instruments used by the client pose a risk should market rates move suddenly. An example of this would be in cases where contracts do not match the due dates of exposures or with certain derivatives that have a one-side limit only. Certain companies and products are more susceptible to risk than others depending on the nature of their business. Risk can be divided into three categories:
Transaction risk - risk associated with each individual transaction.
Translation risk - risk when translating the results of a company into a foreign currency.
Commercial risk - the risk in the degree to which the company's business is dependent upon foreign transactions.
Each type of risk may demand a different strategy and hedging instrument. We will evaluate these risks and the hedges being used. Strategies to Reduce Risk
We develop strategies aimed at reducing risk where possible. All strategies take note of the existing infrastructure of the company, the proficiency of staff involved in the forex function and technology available. Strategies are aimed at delivering sufficient control over the forex function to protect the company and where possible to increase profits at minimum cost and without introducing new risk. Risk in Currency Markets
The currency markets are extremely volatile in that the value of a currency changes by the second. In most companies it is not necessary to track the movement of a currency on a second by second basis. Rather, it is important to establish trends and to have some idea of what forces are operating in the market and how these forces will affect the future value of a currency. It is therefore essential that managers responsible for foreign currency transactions have some method of keeping abreast of market rates other than obtaining quotations from banks. VFP Exchange is well versed in the systems available for this purpose and we make recommendations on which systems should be employed. Advisory Service
Many clients desire an ongoing relationship once a consultancy service has been completed. We are able to offer the following additional services.
Monitoring of the currency rates... We constantly monitor the changes in the rates of exchange between currencies and advise clients of changes in trends and cycles. We also make suggestions on when to establish hedges and what hedges to use against specific exposures. We monitor the forward market in order to advise clients on periods for which to hedge in order that benefit may be derived from interest rate differentials. This market is also monitored for opportunities to change existing contracts if needed.
Monitoring of Positions... We will monitor open positions for clients and make recommendations of when and how to hedge the position. This service involves a telephone call, E-mail message or fax on a daily basis or when certain levels or limits are reached. On advice by a client of maturing hedges or payments falling due we will suggest a course of action in order to try and obtain additional benefit where possible.
Trading Service... VFP Exchange will act on your behalf with your bankers, as an agent operating your instructions under a specific mandate. Typically, VFP Exchange would be mandated to perform the following functions on your behalf:
• Establish hedging instruments to cover firm and ascertainable foreign commitments.
• Utilise the hedging instruments established to convert funds for making payments to overseas creditors or receipt funds from overseas debtors.
• Extend the maturity dates of hedging instruments.
• Cancel hedging instruments.
• Transact spot deals to convert funds resulting from commitments held.
• Place funds in the money market or secure short or long term funding.
• Other financial services as may be requested by the Client.
FOREIGN CURRENCY FOR INDIVIDUALS VFP Exchange extends its services to every level of an organisation and society. Through the facilities we have established in the currency markets we are able to offer our clients competitive exchange rates for traveller's cheques and the transfer abroad of private funds for travel and investment. All transfers are done through the major banks with full Reserve Bank authority and traveller's cheques are issued by one of the major suppliers in this field.
SOFTWARE VFP Exchange Concepts, which specialises in software design and development for the management and control of foreign currency transactions, has systems available that may be used on a time or transaction basis. These systems are employed by VFP Exchange and we have made provision to accommodate independent users within our infrastructure. We would be pleased to demonstrate these systems to you at your convenience and provide you with a quotation for their use. Please view the Products section for an overview of systems available or call us for a demonstration or quotation.
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