Cloud computing has soared as the Covid-19 pandemic brought about increased demand for virtual business solutions. However, the subscription-based nature of these IaaS, PaaS and SaaS cloud services introduces foreign currency exposure and it’s important to have a strategy in place to protect against volatility.
According to a recent report by Synergy Research Group, the cloud computing services market grew by as much as 33% in 2020. Infrastructure- and platform-as-a-service (IaaS and PaaS) solutions alone grew by 35% in Q3. These numbers reveal tremendous growth and demand, offset by the global pandemic, for cloud service providers. The numbers are expected to rise as companies become accustomed to the benefits of the cloud.
What is SaaS?
SaaS (software as a service) has already become the choice software solution for many businesses. Rather than installing software locally and carrying the burden of maintenance and security, they can instead "rent" software that's run on a cloud-based server by a company dedicated to making sure everything is safe and up-to-date.
In addition to greater accessibility, compatibility and operational management, the SaaS model offers lower upfront costs than traditional software, making it a better solution for many smaller companies. The downside of these services, however, is the subscription model, which can prove more expensive in the long run, particularly when this subscription is in a different currency and exchange rates enter the mix.
How do exchange rates alter the cost of cloud computing?
It has become common practice to buy and sell cloud services in US Dollars, meaning that businesses outside of the US are exposed to currency risk when making their regular payments.
Using a credit card or PayPal to pay for these services can result in exorbitant fees on top of the cost of unexpected exchange rate fluctuations. When the licence fee is larger than is feasible to put on a card, many turn to wire transfers through their banks. This process is expensive and also slow. Plus, there’s no way to protect against market swings that may happen in the interim.
Over time, these fees and currency discrepancies can add up and put a large dent in the bottom line.
Work with forex specialists
Using the right forex partner for your company can decrease the price of your transfer and also help you hedge against foreign currency risk. Here’s how.
Firstly, we can help you open a USD account that you can access online. You can make payments into that account at a cheaper rate compared to your bank, as you’ll have forex specialists handling the currency conversion, and transfer directly in local currency.
Second, using a forex company means you have the option of implementing a number of forward planning solutions for regular payments. There’s tremendous benefit in booking forward contracts that come at no risk premium. This gives you confidence knowing that your USD exposure is fixed, and margins do not remain open to chance.
See also: The safety measures all good forex brokers should have
Our Currency Solved solution offers:
- Foreign currency accounts in your name.
- Same-day payments – processed every 30 minutes.
- A self-service hedging platform, allowing you to do your own forward planning.
- Specialist broker assistance, whereby you can pick up the phone and talk to us when you need to.
- Interbank visibility to view all relevant rates in real-time.
- Multiple user permission capabilities that provide different permission levels to various members of your team.
With the year we have had, volatility is here to stay and it is only in the effective management of foreign exchange risk that you can truly start planning and managing your cash flow.
We have been helping businesses manage their forex risk and exposure for over 20 years and we are able to provide a cost-effective, consultancy-led service that can make a fundamental difference to your bottom line. As the industry expands, margins have become tighter than ever before and the inability to manage currency fluctuations can be the difference between a profitable company and an illiquid one. For a free foreign exchange consultation, email us at firstname.lastname@example.org, or give us a call on +44 (0) 20 7759 7554.
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