Designing Your Forex Plan
OANDA's FX consultants will design a custom Forex Plan to address your corporation’s specific issues and needs, showing how you can observe Best Forex Practices to manage foreign exchange in the most cost-effective and efficient way.
There are four phases to establishing a successful Forex Plan:
- Build a Case for Change
This information-gathering phase is extremely valuable because it shows where you are today, where you want to be in the future, and what is the expected benefit of the change.
- Plan
We'll help you create a plan to detail what needs to be done, who will do it, when, and with which resources.
- Implement
We’ll oversee the successful implementation of your Forex Plan so it becomes an integrated part of your company's day-to-day operations.
- Review
We’ll conduct reviews during each phase to ensure that senior management signs off on decisions related to the plan. The end result? A sustainable, effective process tailored to your company's needs.
1. Build a Case for Change
With any change to a business process, you need to build a case for change. We will review your historical forex exposures and forex transactions. We will determine where you are today and where to you want to be in the future.- Current forex exposure review
- Where do you stand today with current processes for forex management?
- Where do you want to be?
- What is it going to take?
- Designate an implementation sponsor
- High-level impact assessment
- Review existing general ledger activity in the foreign currency accounts (Gain/loss account and OCI accounts)
- Take a sample historical review or monitor current activity to compare forex rates and forex hedge costs.
- Create a high-level budget
- Present a "Managing Foreign Exchange" plan to Senior Management for signoff.
2. Plan
During this phase, we will determine what will be done, by whom, by which date, using which resources.- Resource Plan
- Internal Resources
- External Resources
- Forex Hedging Policy (see the Sample Forex Policies PDF)
- Recorded forex assets and liabilities
- Future forex assets and liabilities
- Hedging parameters
- Competitive Suppliers
- Determine a list of competitive forex suppliers and counterparties
- Scope of activity to be decided with objectives and timelines
- Fair value hedges
- Cash flow hedges
- FX transfers
- Project Review Methodology – schedule progress updates
3. Implement
We will go through the process of implementing your Managing Foreign Currency plan so it becomes a sustainable process for your company.- Education – bring your team up to speed on the issues
- Competitive Forex Providers
- Select your forex suppliers and counterparties
- Negotiate forex transactions at more favorable price points
- Data Capture and Validation
- Identify your forex exposures
- Identify and implement data capture methods
- Validate foreign currency exposures
- Process design – internal controls
- Consider business processes and documentation requirements
- Internal controls – segregation of duties, authorization limits, reviews
- Accounting and reporting
- Completing forex hedging
- Consider testing forex hedging in simulated scenarios
- GAAP Accounting and Report Production (See the GAAP Accounting PDF)
4. Review
Reviews will take place throughout all stages of the planning and implementation phases to ensure senior management signs off on decisions.- Reviews and controls during the planning phase
- Reviews and controls during the implementation phase, with decision points
- Post-implementation review. Typically handled directly by the company, a post-implementation review of the process identifies potential areas for improvement.
