Understanding foreign exchange exposure 

FX risk, or foreign exchange risk, arises when a business operates in more than one currency. 

If you invoice customers, pay suppliers or hold balances in a foreign currency, changes in exchange rates can affect the value of those payments. Movements in currency markets may increase costs or reduce revenues when amounts are converted back into your domestic currency. 

FX risk typically arises when there is a time gap between agreeing a price in one currency and making or receiving the actual payment. During that period, exchange rates may move. 

For businesses with recurring cross-border activity, understanding FX exposure can help create greater visibility over future cash flows. As part of the SwissFx onboarding process, currency exposure may be reviewed to help identify potential areas of risk.