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  Forward Contract
A forward rate is a rate that you are given now to exchange a currency at a future date. If you need to make or receive a payment at a future date and want to know now what it will cost you at that future date you can book the exchange rate now safeguarding your profit.
Example Company A, an American company is contracted to purchase a machine for the price of 1 million British pounds (GBPs) in 6 months time. By failing to put a forward contract in place Company A runs the risk of the GBP strengthening or equally the USD weakening in the interim causing the purchase price to become more expensive at the future date. You can agree now to book your GBPs for delivery in 6 months time. In other words TransferMate can book a future exchange rate for you now for payment at some time in the future, setting the amount of your local currency needed to make the purchase in 6 months time.
Rather than simply leave it all up to chance booking a forward contract will allow you peace of mind to know exactly what your future contract will yield/cost your business.
In the case above if Company A had contracted to buy the machine in January 2007 and did not book a forward contract they would have had to pay 1.98 million USD. If they had booked a forward contract they would have only paid 1.95 million USD saving themselves USD300,000. Flexi Forward Contract
A flexible-forward contract is a product that TransferMate has developed to allow you to book an exchange rate to be paid for by a future date. This is particularly useful for a company with a regular overseas payment requirement.
Example Company B needs to pay suppliers in the UK every month in GBP and would like to manage their currency exposure allowing them to make an extra margin. The beauty of a flexi-forward is the flexibility that it allows. Company B can book £200,000 and only convert it when it is convenient to do so. The total amount of booked currency must be drawn down within 3 months however it can drawn down in parts at any date that suit you.
You can book your foreign currency i.e GBPs now at today’s exchange rate but can pay for it bit by bit when the rate that you bought it for is better than the rates on the days you need to make payments. On days that the rate isn’t as good as that days rate you can hold off on drawing it down. Although you will need to draw it down and pay for your GBPs by a future date you have the added bonus of allowing your business the possibility of making a larger profit margin boosted by the favourable exchange rate you locked in.
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