When did you become an importer exporter? When you started dealing in Foreign Exchange...

| Tuesday June 2

Small Biz Matters – a half hour program each week where you can work ON your business rather than IN it.
with Alexi Boyd, broadcaster, advocate and small business owner.
Date: 2 June 2020

Do you know what FOREX stands for? Do you watch the Australian Dollar go up and down and not truly understand what it means? Do you think your small business is unaffected by minor fluctuations in the Aussie Dollar?

Think again.

Even those of us who DON’T have an e-commerce site or deal with international clients or corporates paying invoices in USD, are affected by changes to the dollar. Without realising it you’re actually having  an effect as an exporter importer. How? Think about your suppliers - digital subscriptions paid in USD, goods or services bought on ebay or those clients you sell to overseas … it all adds up to changes which can potentially have big impact on your cash flow.

So let’s really find out how the foreign exchange rate (that’s FOREX) affects your small business and what you need to know to keep an eye on it. Rylan Dawes is the VP of FX for Airwallex and he’s here to teach us all we need to know about FOREX.

Welcome to the show Rylan.

Topics we’ll be covering:

  • What is foreign exchange risk, and what are some of the ways small businesses mitigate that?
    • Forex is simply when you conduct a business across borders. The risk happens when the exchange rate changes between when you make the transaction and when the funds are settled.
    • Small business need to be aware of things like
      • lag times
      • Invoice dates
    • This has a huge cash flow impact
  • What types of products should small business know about to mitigate risk
    • Broadly how do
    • Banks (traditional) vs other, newer options
  • An example of volatility has been the the FX market in COVID-19?
    • Why does small business need to keep an eye on that volatility?
      • You can make a loss in a matter of days when there is extreme volatility
      • Purchases included like software subscriptions - subscription creep
    • Jan - lowest level of volatility and within 2 weeks, a spike not seen since GFC
    • How do you keep an eye on that volatility?
      • Examples of tools - price alerts to buy FX to offset the volatility in costs from FX movements
      • It works on both directions - sales and marketing
    • What is the impact of currency volatility on small businesses today?
    • What is your advice to small businesses who do not have any dedicated finance teams or large finance teams to still be kept educated on FX movements? Who can you have on your side to support you?
      • STRATEGY:
      • Be aware of what you buy and sell in other currencies
      • Be prepared if you have a large transaction coming up in say, 30days time
      • Educate yourself in the tools you can use (alerts about exchange rates at a certain rate)
      • Establish if you’ve got any natural hedges (revenues or costs in USD). Rather than converting all of these immediately
        • Reduce the FX risk but you may have additional costs with moving money around
        • And that’s when you should seek the help of an expert...

Rylan Dawes Bio

Joined Airwallex: 2017

Role: Responsible for end-to-end provision of FX product, including internal risk management

Biography:

  • Deakin University graduate (BComm/BA, Finance / International Relations)
  • Joined Airwallex was as a product manager in April 2017, promoted to VP – FX Product in January 2018
  • Previously employed by ANZ as a Senior Business Analyst and has FX experience with Morgan Stanley and Goldman Sachs

Areas of expertise and insight:

  • FX
  • Risk management
  • Fintech product delivery
  • Financial markets
  • Customer experience and integration management

Overview of Airwallex

Airwallex was founded in Melbourne, Australia in 2015 with a simple goal - to push the boundaries of global financial services capabilities in an increasingly borderless world. Airwallex has since secured over  $360 million USD in external funding, supported by top-tier investors including Tencent, Sequoia Capital China, DST Global, Hillhouse Capital, Horizons Ventures, ANZi Ventures, Square Peg Capital, Gobi Partners and Salesforce Ventures. The company’s core strength lies in its proprietary tech-driven infrastructure to enable low-cost, high-speed and transparent international collections and payments (accessible via API), its business account and borderless card which helps businesses grow both domestically and internationally. Airwallex has grown to over 420 employees across 10 international offices (Melbourne, Hong Kong, Shanghai, Shenzhen, Beijing, Singapore, London, San Francisco, Tokyo, and Bangalore).

To find out more go to their website: www.airwallex.com