Currency Lessons For SMEs From Al Ansari Exchange's Rashed Ali Al Ansari If your SME is working across multiple markets (and in multiple currencies), paying attention to nuances in currency and fluctuating rates might just be one more way to save some money.

"Depending on the volume of transactions, getting the most competitive exchange rate will obviously result in cost savings and potentially have an impact on the company's bottom line," says Rashed Ali Al Ansari, General Manager and member of the board of directors of the UAE -based money exchange and remittance company, Al Ansari Exchange. "Getting the right advice from the experts on the different types of remittance options available in the market as well as which currency to send, could be another potential saving tool. The larger your cross-border business the higher the importance of such currency exchange policies."

If your SME is working across multiple markets (and in multiple currencies), paying attention to nuances in currency and fluctuating rates might just be one more way to save some money. If you're an entrepreneur heading up a company with multiple country offices, it is in your interest to mitigate the risk of currency fluctuations, explains Al Ansari. "Hedging techniques are widely used by many businesses as a form of mitigating the risks of currency fluctuations. Currencies could become volatile as a result of the emergence of new economic data, simply following political announcements of certain influential bodies, or governments which makes it unpredictable. In general, businesses that deal across borders over time and cannot use the condition of procuring or selling in their local currencies, are exposed to currency fluctuation risks." The General Manager suggests reducing your enterprise's exposure to this by either dealing exclusively in a currency pegged to the local currency, like the dirham or the U.S. dollar, or hedge against that currency. "Derivatives, futures and swaps are examples of the different instruments used for hedging. In simplistic terms, you can consider hedging as an insurance policy, where you pay a premium for having it, then decide to either do nothing if the currency goes to your favor over time, or claim it if the currency goes against you. You can purchase these instruments in futures markets and stock markets that trade commodities and future contracts."

Al Ansari adds that entrepreneurs working in countries with pegged currencies need to be aware of hidden charges, abnormal commissions, and markups by some financial institutions, but all in all, it's positive as the currency fluctuation risk is mitigated, giving you one less thing to factor in. And when you're about to launch in a pegged currency nation? "Our best advice is to shop around and bargain even on a pegged currency. You are more likely to get a competitive rate on larger amounts. Generally, exchange houses offer more competitive rates compared to banks as they have lower overheads and operating costs which goes as extra value to the customers."

Al Ansari Exchange, which is over 150 branches strong, also offers services structured for all sizes of companies, and that includes startups. Two such services, corporate cash collection and PayPlus, a payroll solution built in compliance with the directives of the UAE Ministry of Labour under the Wages Protection System, are outside of the realm of currency, but they streamline processes that may be too labor and care-intensive to handle in-house. "Al Ansari Exchange Premium Services was established as a response to the needs of business and corporate clients that require currency exchange and remittance services for their businesses. This service provides a dedicated account manager who better understands their needs and requirements, and is capable of conducting the transactions for institutional clients, without them having to visit our branches. Account managers add value in terms of advice on cost saving techniques for businesses depending on their needs. For instance, it is more cost-effective to remit in U.S. dollars to certain countries and convert it into the local currency there, while in other cases, it is the other way round and so on." And for smaller institutional clients, who may have less frequent remittance and currency exchange service requirements, there is the online portal.

In terms of financial literacy and awareness and understanding of economic trends, Al Ansari says that currently, the general public is comparably well-versed with the particulars, due to the influx of technology and the access that the Internet allows. "Nowadays, technology has made it easy for individuals to gain access to rates directly from stock exchanges and trading floors along with detailed analytical reports that help them understand the dynamics that determine the volatility of currencies worldwide. Although there is no specific tool or formula that can predict exact currency movements, there are indications such as economic outlooks of countries, budget deficits or surpluses, job reports, consumer confidence, international trade levels, even effect of natural disasters and calamities and the recovery thereof, all of which could influence the currencies of the countries around the world. The high level of Internet penetration has made such information accessible and as a result, the members of the public are far wiser today when it comes to financial literacy."