SMEs can get their hands on transparent, real-time rates via HSBC’s digital forex solution

[This is a sponsored article with HSBC.]

SMEs make up 98.5% of the total 921K businesses in the nation. With SMEs in mind, HSBC Malaysia continues in their facilitation of local businesses, providing tools for pandemic recovery, growth, and international expansion.

Despite the projected difficulties in 2021, Malaysian businesses remain positive about international trade, with 74% of the local businesses planning to expand into Asia Pacific within the next 3 to 5 years, according to HSBC’s Navigator Survey 2020. For companies looking to expand internationally, one of the key aspects for consideration is foreign exchange (FX).

The Issues With Traditional FX Transactions

FX is the process of buying and selling one currency for another currency in a forex market. Whether it is to pay suppliers in another country or to receive sales proceeds from an international customer, each trade will involve FX dealings.

Usually, for an SME to conduct such a translation, they will have to call their dealer in the bank to request for special rates, or to walk into the branch to execute the FX transaction over the counter. Because of the current work from home (WFH) arrangements, there might be limited resources in banks to assist you directly, and this might delay your transactions.

Imagine if an SME were to pay different suppliers worldwide on a single day,  they will have to repeat the tedious process several times. There may even be a minimum value required for each FX transaction, which may restrict the flexibility needed by SMEs.

While there are other services that can enable FX transactions without going through Telegraphic Transfer (TT) from non-bank institutions, it comes with the additional costs for handling fees to transfer money from your bank to the service provider.

Bypassing Manual In-Person Processes

Instead of having to deal with the manual FX processes, HSBC introduces Get Rate, a tool for SMEs to get a real-time view on FX rates without the hassle of calling a dealer.

As a HSBC customer, you’ll gain price transparency when you book the rate via Get Rate, as the bank’s margin will be displayed prominently on your bank statement.

Through Get Rate, SMEs can complete transactions immediately at the current live special rate. However, there is a 10 to 20 second window for the final approval to lock in the rate for Get Rate.

Book Forex Rates In Advance

As the FX market can be volatile, it is vital for SMEs to reduce their FX risks through currency hedging. One way of doing this is through HSBC Evolve, which gives them the ability to lock FX rates today for a future transaction.

HSBC Evolve is designed specifically to ensure businesses have a full view and execute end-to-end FX transactions including hedging. HSBC Evolve provides SMEs access to 460 currency pairs for sophisticated hedging requirements.

Example Scenario: SH Trading, a local SME wants to pay their supplier in Europe for spare parts required for their manufacturing business.

There are 2 key HSBC services that can be used:
– Get Rate: SH Trading obtains the latest forex rates online, which is 1 Euro = RM4.92, and proceeds to pay its supplier by booking this rate when it executes the transaction .

– Evolve: For its future payments to their supplier, SH Trading is worried about the possibility of Euro strengthening, so they proceed to lock in the current rate of 1 Euro = RM4.92, but only executing the transaction next month.

Even if the FX market next month changes to 1 Euro = RM5.10, the company will not be affected. Thus, they have successfully hedged any future currency risk by ensuring its profit margin remains the same without being affected by FX volatility.

In the example scenarios above, SMEs gain convenience with Get Rate as transactions can be done anywhere via laptop or mobile. Whereas for SMEs with hedging needs, they can gain more control over their FX exposure with Evolve as almost all major currencies are covered.

As an added value service, HSBC provides access to FX research and reports for SMEs to gain further insights into the FX market.

Track Payments And Have Full View Of Your Financial Position

When making payments internationally or domestically, the ability to track the transactions are essential. However, transactions made through Telegraphic Transfers (TT) usually do not come with tracking tools. 

The payees are usually left in the dark and they do not know if the payment goes through.

HSBCnet’s answer to this is the HSBCnet Track Payment feature, where SMEs can obtain real-time status of their collections, credit and payments through desktop or mobile devices.

The tool also informs you if there are any actions you need to take, whether a transaction is rejected, pending, or requires additional documentation to be processed.

Through HSBC, SMEs can elevate their digital banking experience by viewing the financial position of their business across different markets and currencies in one place through the Liquidity Management Dashboard.

The dashboard allows businesses to see what was transferred and when, with a transparent audit trail. Not only that, it also has a tool to help SMEs to forecast cash flow for better working capital management.

If you’re interested in getting access to any of the HSBC FX or payment solutions, you can submit an enquiry form on this page.

• Find out more about HSBC Business Banking Solutions here.
• Read on what we’ve written about HSBC in the past here.

Featured Image Credit: HSBC