With end of the financial year fast approaching, it’s time for businesses to start planning for the new financial year.
Businesses need to sit down, evaluate market dynamics and set their budget and goals. As a business owner or CFO you will need to ensure that your budget aligns to the goals of the business to drive other factors such as achieving market share targets, launching new products, adapting to changing industry conditions, investing in improving quality and winning more contracts.
The recent moves of the Australian Dollar have impacted cross-border business, in the past financial year Australian importers and exporters have witnessed a 10 percent trading range in AUD/USD providing both opportunities and increased costs dependent on the risk management strategy adopted.
For those businesses that suffered increased costs associated with the costs of import invoices, they will have to be absorbed somewhere, most likely through pricing, and then we are back to the budget rate once more.
But what should you be considering when you are looking to set your currency budget levels in 2017-18?
Budget setting considerations
- Do I have a level that I set my pricing from (budget level)? ?
- Review pricing relative to business goals (market share, marketing initiatives, growth strategy, competition, industry maturity) ?
- How often can I review this level? ?
- Do I have the ability to reprice? ?
- What effect will re-pricing have on my business goals? ?
- How accurately can I forecast purchases? ?
- Do I set the same budget level for all stock? ?
- Are my product margins considered premium or price-driven? ?
- What are the market conditions ahead in the currency pairs that I’m exposed to?
At AFEX, we spend time with our clients to understand their industry, providing insights from across our markets, to assist clients in answering these questions. We then work with our clients to develop an appropriate strategy to manage their budget levels. We interpret market data and provide meaningful recommendations that our clients can act upon to achieve their business goals and maintain budgets.
AFEX reviews our clients’ payment processes to ensure risk is removed and processes are made easier and more efficient.
To learn more visit: www.afex.com
David Greene is Business Development Director at AFEX, a global payment and risk management solutions specialist