Mining and Exploration Companies Discover a New Way to Handle Foreign Exchange Transactions

Foreign exchange transactions in the mining and exploration industry have been a huge money making machine for the banks. The average loss when handling foreign exchange through the bank can be as much as 2%-4%.

(PRWEB) April 7, 2006 -- One of the major reasons mining and exploration has been so economically strong is its ability and willingness to embrace new technology and innovation.

There are still a few innovations, however, that need to be discovered…

Foreign exchange transactions in the mining and exploration industry have been a huge money making machine for the banks.

Why is that?
The bank is there to make money for itself, not to make you rich. (Sorry if I’m disappointing anyone)

The average loss when handling foreign exchange through the bank can be as much as 2%-4%. Without any risk management tools, strategies and solutions, the losses can exceed thousands of dollars. You might find it hard to believe, but the numbers are that significant.

Foreign exchange transactions and international money transfers are part of the ongoing accounting process in mining and exploration firms. The fluctuating currency market and high service fees from financial institutions, which are hidden in the exchange rate, can drastically change your company’s profits.

I’ve worked with many companies in the mining and exploration sector, and some facts have become obvious.

1. When it comes to small to mid sized firms, there is only one CFO that is handling 2-3 companies at the same time.

2. Optimizing foreign exchange transactions is often not even on the “Top 10” list of things to do, even though foreign exchange risk is always mentioned in a company’s annual report as a factor that affects profits and cash flow.

3. Most companies are unaware that there is a better way to handle foreign exchange - in preventing losses, minimizing risk, optimizing cash flow and running more of an efficient operation.

4. No one seems to know who to ask for help.

5. There is a very real fear of change.

Besides fluctuations in the price of labor, electricity, fuel, steel and chemicals, a company’s operating results and cash flow are strongly affected by foreign exchange rates and changes in the currency market.

If it’s not handled by a professional in the commercial foreign exchange field, foreign exchange rates and market movements can have a significant impact on results and profitability, contributing to the long-term viability of the company.

It’s time for mining and exploration companies to discover a new way to handle foreign exchange.

When a CFO, controller or accountant can consult and use the services of a commercial foreign exchange specialist, called a foreign exchange broker, the uncontrollable and risky currency market becomes a well-managed part of the business.

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