About 180. That’s how many currencies the United Nations recognizes as legal tender around the world. But despite this, many companies that import and export goods every day do not have a solid currency management process in place. Instead, they leave it up to the carriers to handle conversions for them—leaving them vulnerable to paying much more than they need to.
The pandemic only exacerbated this risk. As countries scrambled to deal with a rapidly escalating crisis, the global market became an increasingly volatile and uncertain place, and exchange rates fluctuated wildly. Shippers that were slow to react lost money unnecessarily at a time when protecting the bottom line was critical. But even for those that did quickly take steps to better manage currency conversions with their carriers, this should serve as a wake-up call. A robust and well-thought-out currency management process is essential during the good times and the bad.
Trusting your carriers is important, especially if you do business with them on a regular basis. But there’s a big difference between reasonable trust and blind faith. Putting checks and balances in place to ensure accuracy isn’t a sign of distrust or disrespect—it’s just a good business practice.
Some shippers learn this the hard way. Every industry has a few players who take advantage of blind spots like this to pad their pockets, and a handful of carriers have been known to charge as much as 10% more than the actual value of the currency when performing conversions. As a result, when shippers don’t verify how their carrier came to a rate or if it’s remotely fair, they may wind up paying a massively inflated rate without even realizing it, pouring money down the drain.
Structure supports a healthy bottom line
Without oversight, currency management can be the Wild West. Developing the right structure protects against overpaying and helps keep outlaws at bay.
If shippers use a transportation management process (TMS) like Honeybee TMS™ from CTSI-Global, they can work with their provider to implement validations and rules at the front end of the shipping process that establishes how a currency conversion will be handled, what sources should be used to determine the exchange rate, and what is required from carriers. This information is then transmitted to the carrier to create clarity for both parties, supporting a more transparent invoicing process.
Build a better currency management process
At CTSI-Global, we understand the complexity of managing a global operation because we’re a global company ourselves. With locations across three continents, we deal in different currencies every day, and we’re well-positioned to help our clients establish strong and sustainable currency management processes that protect their bottom line—now and after the pandemic.
We built our TMS from the ground up, so we know it like the back of our hand. We can work with you to establish the rules, validations, and processes that support your specific needs, leveraging our decades of experience in the logistics world to provide consultative support and recommendations.
Things shouldn’t just go “back to normal” after the pandemic, especially when it comes to something as costly as poor currency management. Smart shippers will use this moment to improve their processes—and ensure they’re ready for the next supply chain disruption.
We’re here to help. Contact us today to get started.