Why Growth-Stage Companies Must Prioritize FX Strategy Before Expanding Internationally
This article is a contribution from our content partner, Deaglo Raising capital is a major milestone for any ambitious company. But when international expansion is the next step, financial leaders often overlook one critical risk—foreign exchange (FX) exposure. In the rush to scale operations, enter new markets, or hire global talent, FX risk can quietly erode profit margins, disrupt financial reporting, and even jeopardize funding rounds. Today’s investors are increasingly attuned to this risk—and they expect CFOs and founders to be too. So, why should growth-stage companies develop a robust FX strategy before raising or deploying capital overseas? Here are five compelling reasons. 1. Currency Volatility Can Damage Your Valuation Let’s say your SaaS company secures a $10M contract in euros, but your valuation and financial reporting are in USD. If the euro depreciates by 10% before that revenue hits your books, you’ve effectively lost $1M in enterprise value. That’s not a hypothetical—it’s a common risk in volatile currency markets. Whether you’re preparing for a Series B raise or eyeing an IPO, investors want revenue consistency. A well-structured FX hedging strategy protects earnings and helps you present a stable, reliable financial outlook. 2. Poor FX Management Signals Weak Financial Controls Investors don’t just assess your growth—they assess how you manage it. Companies operating across multiple currencies without a clear FX policy may raise concerns about operational maturity. Institutional investors are now asking: Having a formal FX policy demonstrates financial discipline, risk awareness, and investor readiness—all critical for securing strategic funding. 3. Hidden FX Costs Can Drain Your Expansion Budget Even basic international transactions—like paying overseas vendors or receiving foreign revenue—carry hidden costs. These include wide FX spreads, wire fees, and inefficient execution practices. Many companies unknowingly lose 0.5% to 3% per transaction, which quickly adds up. Sophisticated companies are now: By identifying and minimizing these costs early, you preserve more of your expansion capital. 4. Passive FX Exposure Limits Strategic Flexibility International growth rarely follows a straight path. You might fast-track a LatAm launch or pursue an acquisition in Southeast Asia. These strategic shifts require speed—and pricing certainty. Without FX hedging, exchange rate volatility can delay or derail deals. A proactive FX strategy allows you to move fast and execute with confidence, helping you convince boards, M&A partners, and investors of your plan’s viability. 5. Why an FX Strategy for Growth-Stage Companies Is Now Non-Negotiable Raising capital from global VCs, corporate venture arms, or family offices? Expect FX-related due diligence. We’ve seen GPs delay capital calls or miscalculate IRR due to poor FX risk management at the portfolio company level. Today, LPs are pressuring fund managers to ensure robust FX controls, and that means startups and scaleups must come prepared with clear policies. Establishing FX governance early not only builds trust—it positions you as a globally scalable business. The Bottom Line: FX Strategy is Investor Strategy FX exposure is a silent risk—but it doesn’t have to be. Companies that treat FX like a core financial pillar are better positioned to win investor confidence, protect growth margins, and scale across borders with less friction. At a time when investors demand both vision and operational excellence, your FX strategy could be the difference between a compelling story and a credible one. Join our Treasury Community Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
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Bridging Old and New: Citi Steps Into Stablecoins and Crypto ETF Custody
From Treasury Masteminds Citigroup is making a bold move by exploring custody for stablecoins and crypto ETFs, alongside payment services that run on tokenized rails. For treasurers, this is more than just another headline in the ongoing “crypto meets banking” saga; it could reshape how we think about payments, liquidity, and safety in digital assets. Why Now? With new rules requiring stablecoins to be backed by high-quality assets like Treasuries and cash, banks are perfectly positioned to step in. Custody of those reserves is a natural fit. Add to that the surge in crypto ETFs and the growing demand for safe, regulated custody, and it’s clear why Citi is leaning in. What This Means for Corporate Treasury What to Watch Our2Cents This is where old meets new; and treasurers stand to benefit. In short; stablecoins could finally move from being a “crypto trading tool” to a treasury-grade liquidity solution. For corporate treasurers, that means faster payments, cheaper cross-border transfers, and the reassurance of real-asset backing—all wrapped in institutional compliance. Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
Debunking 4 Currency Management Myths: Protecting Profit Margins in 2025
This article is written by Kantox When it comes to protecting profit margins with micro-hedging programs, most textbooks on corporate finance start with a discussion about the nature of currency risk. Next, they deal with risk mitigation through exposure netting and FX derivatives. This is a world of pristine simplicity, centred on transaction risk. Quite obviously, things are much more complicated in the real world, as firms have different pricing models and types of exposure to currency risk. By challenging some of the most common, but persistent myths around micro-hedging programs to protect profit margins, this blog will help you improve your decision-making as a currency manager. Some of the most entrenched myths include: Let us briefly tackle these myths one by one. And, most importantly, let us see what real-life best practices in fx-risk-management recommend when it comes to the issues involved. Myth #1: One-size-fits-all solutions Open up a book on currency risk management and you will see that transactional fx-risk-management is, mostly, the only game in town. Granted, there will always be an explanation of the different types of exposure to currency risk. But any example or illustration will tend to refer to individual, FX-denominated transactions. This approach leaves aside the challenge of protecting profit margins in the context of forecasted revenues and expenditures, instead of firm sales/purchase orders like in transactional hedging. But hedging based on forecasts creates three challenges: The dilemmas involved are easy to spot. Managers need to protect the budget rate, instead of the pricing rate in each transaction. In addition, the FX hedge rate displays a forward premium or discount compared to the spot rate—and the reality is that most firms have to face both scenarios. Finally, treasury teams would welcome some flexibility in order to take advantage of possible favourable moves in currency markets. These difficulties, conveniently absent from most textbooks, illustrate the the lack of realism that is the hallmark of ‘one-size-fits-all’ FX hedging solutions. When it comes to protecting profit margins in the real world (as opposed to textbooks), best practices indicate three types of FX hedging programs that reflect major scenarios in terms of pricing: Myth #2: Only risk managers are involved Where does FX hide in the business? This may be a surprising question to ask, given that most observers treat currency risk management as a ‘finance-only’ topic. In ‘siloed’ environments, CFOs talk about risk management and CEOs talk about growth. But what if treasurers could tell the C-suite that currencies can be used to spur growth in a decisive way? The case of Marriott International illustrates the point. CEO Anthony Capuano recently mentioned the group’s Bonvoy app: “Downloads rose nearly 30%. Our digital channels remain key drivers of direct bookings”. Here’s where FX is ‘hidden’: as a growth engine that generates high-margin sales. It is not a ‘finance-only’ topic! The case of Marriott International shows that FX may be ‘hidden’ above the EBIDTA line, at the level of the gross margin. Treasurers can do a better job at explaining this. Once the growth-oriented function of currency management is properly understood, protecting profit margins with micro-hedging becomes a necessity. Myth #3: The myth of oversimplicity An article by Risk.net‘s Cole Lipsky mentions the prevalence of 20%-40%-60%- 80% layered hedging programs at US-based firms, as they tackle FX headwinds from the strong USD. This reflects what we call at Kantox the problem of oversimplicity. Such currency hedging programs beg the question: how do we know that the 20%-40%-60%- 80% schedule represents, for a given treasury team, the optimal solution in terms of: Here’s Kantox’s Antonio Rami on the subject: “Do not oversimplify with a 20%-40%-60%-80% layered FX hedging program just because of its easy implementation. The excessive simplicity of the model can have a huge impact, not only on the principal goal (a smooth hedge rate), but also on secondary goals such as the optimisation of forward points”. Myth #4: The need for super-accurate cash flow forecasts The treasury world stands in awe in the face of GenAI tools that are applied to increase cash flow forecasting accuracy. During a meeting of the European Association of Corporate Treasurers Summit in Brussels, ASML’s Jeroen Van Hulten mesmerised the audience as he presented an AI tool that took forecasting accuracy from 70% to over 96%. This is certainly remarkable. Yet, at Kantox we hold an out-of-consensus view: forecasting accuracy is overstated. For most companies, it should not be a major problem when deploying their fx-risk-management program. By design, a layered hedging program tackles the problem of forecast inaccuracy head-on, as it ‘builds’ the FX hedge rate in advance. And that’s not all. By adding a micro-hedging program for firm commitments, hedging is applied to near-certain exposures. With the right technology, hedging programs —and combinations of programs— can achieve a high standard of precision on their own, even with less-than-perfect forecasting accuracy. How technology puts fx-risk-managements myths to rest The last blog of this series will be devoted to a detailed discussion of the automation requirements in best-practices solutions for protecting profit margins from FX risk. We can already anticipate one conclusion: complex currency management scenarios —an undeniable reality in 2025— call for more, not less, technology. Understanding and properly managing currency risk is a challenging undertaking. As complexity increases, manually executing the required tasks will become more difficult. What’s more, it would add an unnecessary layer of operational risk in the shape of email risk, spreadsheet risk and key person risk—and that’s the last thing treasurers need. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in Treasury Management or those interested in learning more about various topics related to Treasury Management, including Cash Management, Foreign Exchange Management, and Payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
Scaling at warp speed: A CFO’s guide to controlling chaos
This article is a contribution from one of our content partners, Bound From surviving Amazon’s brutal due diligence to scaling Funding Circle from 100 to 1,500 employees, Alysha Randall has built a career out of successfully navigating chaos. Now a fractional CFO, she helps startups transform disorder into growth. Here, she spills her hard-earned career secrets. Helping a company to scale at hyper speed is not for the faint of heart. It requires huge amounts of resilience, creativity, and a willingness to embrace what Alysha fondly terms “controlled chaos”. While she now runs her own advisory business, Alysha is no stranger to being in the thick of it. Her passion for steering companies through messy times began in 2006, when she moved to the UK (from her native Australia) and joined LoveFilm as Director of Finance & Reporting. Back then, the company was on the brink of being acquired by Amazon, a process that would prove to be a crash course in financial due diligence. “It was absolutely savage,” she admits. “I mean, you’d expect nothing less from such a corporate giant, but Amazon scrutinised everything with a fine-tooth comb. And I spent days locked in a hotel room, being grilled on every inch of the finances. To the point that hotels still give me flashbacks!” Despite the baptism by fire, “it was also a great learning opportunity,” she admits. “That experience taught me how critical it is to have a clean balance sheet and robust financial processes. Regardless of everything else that is going on, those things should be your baseline, especially when preparing for major milestones like acquisitions, IPOs, or fundraising rounds.” Being prepared in advance is always going to be time well spent, she believes. “As FD or CFO, you don’t want to be the one holding up a deal, or worse, the reason it falls through.” Keeping your cool Thankfully, the LoveFilm acquisition went smoothly, so Alysha started looking for her next challenge, and joined Funding Circle in 2013 – when the startup was on the cusp of explosive growth. “When I started, there wasn’t a proper finance function,” she explains. “I had to build everything from scratch while the business was growing at an insane pace, going from 100 employees to 1,500 in just five years.” The growth might have been extraordinary, but it came with more than its fair share of issues. “It was such a fast-paced environment, and there was no CFO to guide me,” Alysha recalls. “I was figuring out leadership on the job, while setting up systems and processes to support the rapid expansion – and simultaneously trying to keep operations efficient and transparent.” It was quite the juggling act, she admits. “And when you’re building as you go, there’s absolutely no room to lose focus. You have to be on the ball 24/7.” This was especially true when it came to getting Funding Circle regulated by the UK’s Financial Conduct Authority (FCA). “We had no FCA experience, and it felt like we were out of our depth,” she says. The process required Alysha’s team to implement controls and systems that satisfied regulatory standards, often at odds with the company’s drive to prioritise customers and growth. “It’s hard to convince a fast-moving business to slow down and focus on compliance, but it had to be done,” she explains. “At times it felt like trying to get a teenager to do something they don’t want to do,” she jokes. But Alysha credits key hires, like Gerard Hurley – now Compliance Director and MLRO at Bound – for helping the company navigate the roadblocks. “He was one of the first compliance experts we brought in. His work was instrumental in getting us across the line,” she says. And despite the steep learning curve, the company successfully achieved FCA regulation, laying the groundwork for its future success. Getting IPO-ready As Funding Circle continued to expand, Alysha took on the enormous task of preparing it for an IPO. This involved streamlining financial processes and data across teams and regions, ensuring the business could present a clear and consistent story to investors. “The biggest challenge was aligning our KPIs,” she explains. “Every team and region had its own definitions, and it took nine months to get everyone on the same page. But if we hadn’t made the effort, it would have severely undermined investor confidence.” For many, this mammoth task, combined with the company’s rapid growth journey, would have been overwhelming. But it fired Alysha up: “I’ve always been drawn to the messy, chaotic stages of businesses,” she admits. “That’s where I can make the biggest impact.” Making a quantum leap No surprise, then, that Alysha launched her own advisory business – Fast Growth Consulting – in 2019, offering fractional CFO services to startups at the seed and Series A stages. The move was about three things: independence, impact, and variety. “Fractional work is perfect for me,” she says. “I get to work with so many different founders and businesses. It’s incredibly rewarding to go into a company where the finances are in disarray, clean things up, and set them on a path to success.” Her clients often come to her at their most vulnerable point, with financial systems that are barely holding together. “At that early stage, most companies have only had an external bookkeeper or a founder trying to manage everything themselves,” she explains. “It’s usually a state of disorder, but that’s where I thrive!” One of her first tasks with any client looking to scale rapidly is aligning the company’s financials with its commercial narrative. “A lot of P&Ls are just lists of expenses in alphabetical order,” she says. “That doesn’t tell you, or investors, anything about the business.” By restructuring the P&L to mirror the founder’s pitch deck, Alysha ensures that the numbers reinforce the company’s narrative. “If your financials align with your pitch, it’s much easier to build trust with investors,” she says. “It’s about creating a cohesive story that shows where the business is going and why it’s worth investing in.” Survival of the fittest Having a strong narrative, backed up by numbers,…
FX Uncertainty: Why Financial Planning & Treasury Must Work Hand-in-Hand
This article is written by HedgeFlows The ongoing macroeconomic and foreign exchange (FX) volatility presents a critical challenge for international businesses. Its impact on earnings predictability, liquidity, and solvency demands a proactive and strategic approach. While Financial Planning & Analysis (FP&A) teams focus on forecasting and scenario planning, CFOs or finance executives managing Treasury are tasked with safeguarding the business against catastrophic scenarios. This dual responsibility makes it imperative for FP&A and treasury teams to work together. Collaborative action is the only way businesses can build resilience amid today’s ongoing market turbulence. Understanding FX Uncertainty and Its Dual Impact FX volatility doesn’t just affect large corporations; mid-market enterprises and even small businesses also feel the pressure. Its impact is twofold: Distinct Roles: Achieving alignment allows businesses to address both predictable and extreme impacts, fostering a cohesive and reliable financial outlook. FP&A’s Role: Forecasting Likely Outcomes FP&A teams are at the forefront of modelling likely scenarios to ensure organisations are prepared for foreseeable market conditions. For businesses that operate internationally, this includes FX rates used in the scenarios – so-called “budget rates” but more often than not, require treasury teams or other experts to provide such FX budget rates to FP&A. The FP&A priorities focus on the following key areas: Tools of the Trade: FP&A teams often employ forecasting techniques like rolling forecasts, sensitivity analyses, and scenario planning to create accurate and actionable models. These models include: By focusing on agility, accuracy, and responsiveness, FP&A establishes a strong foundation for decision-making. Treasury’s Role: Preparing for the Worst Treasury plays a complementary role, focusing beyond expected scenarios and preparing for extreme risk. This forward-looking approach ensures the business is safeguarded even under the harshest conditions. Key priorities include mitigating financial crises, extreme FX volatility, and even systemic banking risks. Treasury’s toolkit comprises a variety of strategies: Treasury ensures that even under catastrophic scenarios, the organisation’s liquidity and solvency remain strong. A bit of theory – the probability angle Planning for FX uncertainty is married to the notion that exchange rates move randomly over time, and the changes in the value of currencies over a specific period have different likelihoods. This likelihood is distributed in a manner close to a normal distribution. For example, the graph below shows the historical distribution of 90-day moves of the Pound Sterling vs the US Dollar (grey) and it is a normally distributed model. As one can see, most of the potential outcomes are small moves clustered around zero, but in rarer outcomes, the exchange rate moved more than 20% over 90 days. Treasury managers should be most concerned with potential 1 in 100 and 1 in 5 chances (red and orange areas) while FP&A team is focused on the area closer to the middle of the bell curve, trusting that the treasury or risk manager will take care of the tail risk scenarios. Connecting the Two: A Holistic Approach The connection between FP&A and Treasury lies in their ability to inform and enhance each other’s work. A coordinated approach can help businesses achieve more accurate forecasting and better risk mitigation. How FP&A Supports Treasury: How Treasury Enhances FP&A: For example, if FP&A forecasts a 10% risk to revenues and Treasury executes a targeted hedge using forward contracts, the combined effort ensures both predictability and protection. Bridging the Communication Gap Collaboration hinges on effective communication. Here’s how FP&A and Treasury can bridge the gap and work better together: Practical steps like the above can transform two siloed departments into a unified force against FX uncertainty. Real-Life Examples & Case Studies Success Story: An international mid-market retailer successfully navigated 2022’s currency chaos by establishing a joint FX task force between FP&A and Treasury. By pooling data-driven insights and implementing collaborative hedging strategies, the company reduced its FX-related earnings impact by 15%, while maintaining 20% liquidity buffers. What Happens Without Collaboration? On the other hand, a mid-sized manufacturing company experienced losses of up to $2 million due to misalignment. FP&A correctly estimated currency exposures, but Treasury underhedged due to making their decisions on the back of stale forecasts from FP&A, leading to unnecessary FX losses. This siloed approach resulted in volatile cashflows and strategic missteps. Collaboration is not just a best practice but a financial imperative. Common Pitfalls of Isolated Approaches When FP&A and Treasury operate independently, the risks grow exponentially, including: The cost of isolation far outweighs the investment in collaboration. Checklist: Integrating FP&A and Treasury Aligning FP&A and Treasury doesn’t have to be daunting. Use this framework to get started: This checklist ensures a practical roadmap for integration and synergy. Key Takeaways The key to managing FX uncertainty lies in the alignment of FP&A and Treasury. Together, they: With the stakes of FX volatility higher than ever, mid-market businesses must act now. Begin strengthening your FX strategy by fostering collaboration between these vital functions. Also Read Join our Treasury Community Treasury Masterminds is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.
Fair Banking: Why Corporate Treasurers Should Pay Attention
From Treasury Masterminds Last week, President Trump signed the “Guaranteeing Fair Banking for All Americans” executive order.In short? It’s aimed at stopping banks from “debanking” customers for political, religious, or other non-risk-based reasons. For treasurers, this is more than just U.S. political news. It’s about bank access, predictability, and risk management—three things you really don’t want messed with. What’s Changing? Why Treasurers Should Care Bottom Line This order might reduce uncertainty for corporate banking relationships—at least in the U.S.—but it won’t remove the need for treasurers to run a tight ship.Strong governance, clean data, and transparent operations will still be your best insurance against losing access to critical banking services. And frankly—we need more of this in the EU too. Fair, transparent, risk-based banking should be a global standard, not a local policy experiment. Also Read Join our Treasury Community Treasury Mastermind is a community of professionals working in treasury management or those interested in learning more about various topics related to treasury management, including cash management, foreign exchange management, and payments. To register and connect with Treasury professionals, click [HERE] or fill out the form below to get more information. Notice: JavaScript is required for this content.