Trade war can hurt software & service businesses, too
This article is written by HedgeFlows Currency swings from global trade disputes can undercut service business profits – but often, the true impact is only noticed months down the line. While manufacturers may brace for tariffs and supply disruptions, service-based firms from SaaS startups to international consultancies are just as exposed to the shifting tides of foreign exchange (FX) markets. Yet, without the right tools and awareness, these risks might go unseen until it’s too late. This post explores how trade wars and FX volatility affect service sector businesses, why losses can remain hidden in financial statements, and what steps you can take to protect your margins. How currency moves can erode your profits Trade wars make headlines for abrupt price swings of goods and disrupted supply chains, but the knock-on effect on FX rates is just as critical. Political tension, tariff talk, and the prospect of weakening the US dollar have sparked significant adjustment in currency markets. Since the start of April, the US dollar has weakened by more than 6% against Swiss Franc and Korean Won, and 4-5% against a wide range of currencies such as EUR, GBP, ILS and MXN. Despite regular denials from central banks and government officials, speculation over a weaker dollar lingers, and global currencies are moving in response. For service businesses paid in one currency and with operational expenses in another, these FX moves quietly shape profit and loss. Unlike product-based businesses, where frequent orders and invoices can instantly reflect currency changes, the impact on services often lurks off the balance sheet. Many finance teams only focus on FX losses once they hit the income statement. By then, much of the damage is already done. Worse, not all FX effects even show up in company accounts, masking real losses and eroding business value over time. Hidden FX risks service businesses face 1. FX costs in software-as-a-service (SaaS) companies Consider a SaaS company earning revenue in US dollars but employing developers in Poland, Israel or Mexico. Each monthly payroll is paid in local currency. When the US dollar drops 5% against the Polish Zloty, Israeli Shekel or Mexican Peso, your US dollar costs for software development instantly rise by 5%. Since payroll is an expense, not an asset, it won’t appear on the balance sheet or reveal FX losses through your usual lines. You don’t see a separate “FX losses” entry in your profit and loss report for payroll outflows. Yet, if exchange rates remain steady going forward, your future R&D costs in dollar terms are now permanently higher. This quiet cost drag compresses margins and misses the eye of many boards and CFOs. Example in numbers Suppose you were spending $200,000 per month on developers in Mexico. If the USDMXN exchange rate drops 5%, your cost jumps to $210,000 almost overnight. But unless you’re monitoring real-time FX adjustments and adjusting forecasts, you may not react until the effect accumulates over many months. 2. Professional services and contract devaluation Service firms based in the UK, but winning large contracts priced in US dollars (or currencies pegged to the dollar, like the UAE dirham or Saudi riyal), face a different trap. Long-term deals locked in at a fixed exchange rate may quietly decline in value if sterling strengthens or the US dollar weakens. Since many of these projects invoice as they reach milestones, the fall in contract value isn’t immediately visible on your books. Out-of-sight, out-of-mind Until an invoice is raised, the future revenue sits as an off-balance-sheet expectation. A change in the dollar’s value transforms the pound amount you’ll eventually receive, but unless you recalculate contract values regularly, the risk remains hidden. This can leave your finance team underestimating future threats to cash flow and profitability. Why do these FX risks often go unnoticed? Service businesses have less tangible working capital than manufacturers. Currency effects filter through financial statements more slowly and often bypass headline metrics until the fiscal year closes. Payroll and professional fees are generally accounted for at spot rates, while revenue projections might lock in old assumptions. Traditional accounting tracks realised gains and losses, but the impact of shifts in currency on future contract values or long-term overseas payroll is typically off the radar. This quiet erosion of profit can materially change your margin profile by the time anybody spots a trend. Strategies for managing FX exposure Proactive currency risk management gives service businesses a fighting chance—even amid a trade war. Here’s where to start: 1. Monitor and forecast FX exposure regularly 2. Hedge critical exposures 3. Build FX awareness into pricing and contract terms 4. Improve internal reporting 5. Stay informed on policy signals The silent cost of doing nothing Currency-driven profit erosion grows more dangerous the longer it goes unaddressed. Service businesses, in particular, tend to be agile and cost-conscious, but ignoring FX exposure creates a blind spot that can wipe out hard-earned growth. If your business pays international staff, delivers long-term contracts in foreign currencies, or relies on predictable margins for growth, FX risk from trade disputes is real and urgent. It’s critical to bridge the gap between finance and operational leaders to build resilience for whatever the global market brings next. Try implementing some of these strategies or consult with a specialist to evaluate your current risks and possible protections. If you’re interested in more insights on managing FX risk or want help safeguarding your profits, check out our video explainer and get in touch with our team for a personalised assessment. Take control of your service business margins today Currency volatility from trade disputes is here to stay. Don’t wait for next quarter’s report to discover that avoidable profit loss is already baked into your numbers. Take a proactive approach to FX risk, educate your finance team, and incorporate currency moves into both planning and day-to-day decisions. With practical steps and the right awareness, service businesses can stop hidden FX shifts from quietly eroding future value and keep financial performance on a solid footing—even through…
Franklin
Checklist: Is Manual Reporting Slowing Down Your Cash Strategy?
This article is written by Treasury4 A 6-Point Gut Check for Treasury and Accounting Teams The report wasn’t late, but it wasn’t early.The spreadsheet opened with a warning—something about links.One tab said “FINAL_v2,” another said “USE THIS ONE.”Someone changed the numbers, but didn’t say which ones. It was 5:07 PM.You sent it anyway. If that felt familiar, this checklist is for you. But not just to save time. To fix the manual breakdowns holding your cash strategy back: No time to read? Take these takeaways with you: What This Checklist Is (and Isn’t) This isn’t a tech wishlist. It’s a real-world gut check for teams who are still duct-taping their way through: You don’t need a full overhaul. You need to know where the friction is—and how to start fixing it. How to Use This Checklist Pick one report you run regularly. Then go line by line. If the problem shows up, check the box. That’s your signal: there’s a fix worth pursuing. Small improvements—like cleaning up version control or documenting categorization rules—save hours weekly. But more importantly, they give you space to get out of triage mode and into strategy. Your Manual Reporting Breakdown Checklist: You spend more time gathering data than analyzing it It starts with a simple request: “Can we get an updated Cash Position Report by 10?”You check the ERP. One export. Then the bank portal. Another. Then your GL detail for classifications, and maybe a budget file to explain any large movements. Now it’s 9:26 AM and you’re still stitching together numbers instead of analyzing them. The CFO’s follow-up—“Where did that $1.4M go?”—is going to be harder to answer than it should be. Short-term fix: Pick one high-friction report—Cash Visibility, Collections, or Forecasting—and consolidate the source files you always pull. Even if it’s still manual, combining them into a single, stable worksheet reduces rework and gives you a more consistent base. No more chasing down the same data five different ways every time. Long-term fix: When your data lives in a structured system—with change tracking, dimensional filters, and consistent inputs—you skip the manual prep. Reports populate automatically, and your job shifts from gathering to interpreting. You can break down cash by entity or region, trace variances to specific transaction types, and answer questions like: Instead of scrambling to gather inputs, you’re interpreting patterns—and giving leadership answers they can act on. Reconciliation happens manually in Excel You’re scanning rows in the Statement of Cash report, trying to figure out why the inflows don’t match what’s showing in your GL.One transaction’s miscategorized. Another’s double-counted. You sort by vendor, trace back through AP exports, and manually match payments against receipts. Again. It’s late, and you’re still cross-referencing cells instead of reviewing exceptions. Short-term fix: Write down the rules you already use—what fields you match first (amount? vendor?), what you do when the data doesn’t align, and where you allow for timing differences. Turn that into a simple reference doc. Then build formulas to automate the first pass, so you’re not relying on visual spot checks every time. Long-term fix: In a modern cash & treasury management platform, reconciliation logic doesn’t live in your head—or your Excel formulas. It’s embedded in how the data flows and flags exceptions automatically. You can reconcile faster, trace line items down to the transaction level, and answer: Instead of redoing the same matchups every cycle, you’re reviewing only what’s changed—and trusting what hasn’t. Categorization rules aren’t documented You know that vendor X always goes under Office Expenses. That transfers between accounts shouldn’t show up in Cash Flow from Operations. That refunds hit a separate line—unless they’re credit memos, in which case… it depends. It all lives in your head—or maybe scattered across sticky notes and half-finished SOPs. Short-term fix: List the rules you apply without thinking. Start with categories you touch the most—like transfers, one-off reimbursements, or CapEx. Even a rough reference doc can speed up your own process and help others step in with confidence when needed. Long-term fix: When categorization logic is embedded in your system—not manually applied—it happens once, and it sticks.Every transaction is labeled accurately from the start, so your reports reflect reality: Clean categorization = cleaner reporting, less rework, and fewer questions down the line. Multiple versions of the same report exist Your manager is reviewing FINAL_v4, but AP is still working off FINAL_v3_REVISED. Meanwhile, someone just shared a file called “Use This One (NEW).xlsx.”You’re all looking at different numbers—and no one’s sure which is right. Version control shouldn’t depend on memory, naming conventions, or Slack threads.At this point, it’s not just a workflow problem—it’s a data integrity and access control issue. Short-term fix: Pick one location—shared drive, folder, or workspace—and make it the single source of truth for recurring reports. Set a clear naming convention (like LIVE_[ReportName]) and communicate which version is active. It’s basic, but even this reduces risk and confusion across the team. Long-term fix: In a system with built-in version control and change tracking, there’s no ambiguity. Everyone sees the same report—same filters, same timestamp, same logic—whether it’s a Cash Visibility dashboard or a Statement of Cash rollforward. Because the data lives in a centralized, governed environment, changes are tracked, access is permissioned, and every update is transparent.No last-minute file swaps. No conflicts across departments. Just one version—clean, current, and review-ready. Only one person can run the report You’re out for two days. Someone pings you asking how to refresh the Forecasting report.You left notes… somewhere. But the logic isn’t obvious, the filters are finicky, and there’s a manual adjustment you always make that no one else knows about. Now they’re either guessing—or waiting on you. Short-term fix: Write down the steps, filters, and edge cases for one key report. Don’t worry about formatting—just capture the logic and common pitfalls. Share it in your team drive. It’s not a full handoff. It’s a safety net. Long-term fix: When reporting lives in the system—not in one person’s brain—it becomes scalable. Rules and logic are documented, data access is governed, and processes aren’t blocked by PTO or context gaps.Anyone…