Forward contracts are binding agreements to provide predictable cash flow management and accurate forecasting by locking in fixed exchange rates. You can also add forward windows to further reduce or eliminate currency risks by locking in rates for up to 6 months.
Use forward contracts to hedge currency exchange risk at fixed rates at future dates.
Predictable Cash Flow
Manage your future cash flow with certainty and predictability to grow your business.
FEATURES OF FORWARD CONTRACTS
- Lock in a Fixed Rate of Exchange – For the purchase or sale of foreign currency for delivery at a future date.
- Accurate Forecasting – Cost-efficient, flexible and transparent tool to help hedge against fluctuations in currency markets. It allows you to more accurately project revenue and expenses.
- Binding Agreement – Occurs when both the seller and the buyer agree upon the amount of foreign currency, the rate of exchange and the date of delivery of the contract.
- Reduce Risks – With a forward window for a forward purchase or sale to give you ultimate flexibility in using the funds locked into the forward up to 6 months.
- Minimal Impact to Cash Flow – Forward contracts require minimum deposits, typically 10% of the total value of the contract in most major currencies, delivery for any date up to a year for outgoing or incoming payments.
While forward contracts are designed to minimize risk, they do not eliminate risk, and they may not be appropriate for every customer or every situation. Commonwealth is not acting as your financial advisor or fiduciary with respect to any foreign exchange transaction. Before entering into any foreign exchange transaction with us, you should consult with a financial, legal and/or tax advisor to ensure you understand the transaction and have assessed the appropriateness of the transaction for your situation, including any risks and benefits involved.