What an FX audit looks at, and why it matters

An FX audit brings clarity to how foreign exchange works across an organization. In the context of international operations, reviewing FX spreads, conversions, payment processes and exposure together provides a coherent view of where unnecessary costs arise. This includes how FX affects profit margins and budgets, and how FX-related processes fit into day-to-day operations. 

When avoidable FX costs and inefficiencies emerge 

Within an international FX setup, the way accounts, currencies, payment flows and currency conversions are organised plays a central role in shaping costs and efficiency. An FX audit examines this structure in detail, looking at how these elements interact in day-to-day operations and how the setup has evolved over time. 

This perspective helps reveal if the current FX setup is creating unnecessary complexity, operational friction and avoidable FX costs over time. This includes costs linked to pricing, repeated conversions and operational constraints that tend to remain hidden when FX is viewed one transaction at a time. 

Understanding FX spreads and how they affect costs 

One of the first areas an FX audit looks at is FX spreads, which is the difference between the market exchange rate and the rate applied by a provider. 

In foreign exchange, this spread is typically built directly into the exchange rate rather than charged as a separate fee. Because the conversion happens seamlessly and the cost is embedded in the rate itself, the value applied is rarely examined in detail and often sits outside of routine financial reviews. 

An FX audit compares the rates applied across currencies and providers with reference market rates. This helps to clarify whether the FX spreads applied are competitive, or if the current setup involves markups that are higher than necessary. 

For many organisations, this creates visibility into costs that were previously absorbed into everyday operations without being explicitly assessed. 

Identifying avoidable FX conversions 

FX costs are not only influenced by the FX spreads applied, but also by how often funds are converted. An FX audit looks at how money is received, held and paid across currencies, and where conversions occur automatically because of how the current setup is structured. 

In many cases, additional conversions are required because businesses do not have access to accounts in the currencies they need to pay suppliers or receive revenues. As a result, funds may be converted several times before reaching their destination. 

By mapping these flows end to end, an FX audit helps identify which conversions are truly necessary and which could be avoided through alternative arrangements. Therefore, it simplifies operations and limits costs from repeated currency conversions. 

Clarifying FX exposure and its impact on budgets 

Exchange rates can change rapidly, and even modest movements can influence budgets and expected profit margins.  In many cases, this exposure remains only partially visible because it sits within everyday activities, and the tools needed to manage it are not always in place. 

An FX audit brings this into focus. It looks at how future cash flows are exposed to currency movements, where exchange rate volatility introduces uncertainty into budgeting and planning, and which options are available to manage the exposure more effectively. 

As a result, businesses benefit from more predictable financial planning, in line with the business’ operating model and risk tolerance. 

Understanding operational inefficiencies around payments 

An FX audit looks at how payments are executed in practice and where workflows could be more efficient. It identifies payments that could be processed faster, steps that could be automated or removed, and ways to reduce manual handling for finance teams. This includes improving support for bulk or recurring payments, reducing dependency on manual processes, and simplifying execution across currencies and accounts. 

By highlighting these opportunities, an FX audit supports faster, more efficient and secure payment processes. This enables teams to complete tasks with less effort and a lower risk of manual errors. 

What organisations gain from an FX audit 

An FX audit gives finance teams a clearer basis for making FX-related decisions. It helps to build a more complete understanding of how FX costs, payment execution, currency exposure and operational processes affect the business. 

After an audit, it is easier to assess the impact of FX decisions on budgets, margins and cash flows. Businesses use the insights it brings to manage FX with confidence and intent, in line with how they operate and forecast.