Foreign exchange (FX) and international payments have long been a source of frustration for CFOs. Between high fees, slow processing times, and layers of compliance requirements, managing global payments is not just a technical process—it’s a strategic challenge.
Businesses are increasingly operating across borders and CFOs need more than just a basic understanding of how FX works. They need the tools, partnerships, and systems in place to control costs, manage risk, and deliver clear financial insights to their organizations.
This article explores the critical issues behind B2B payments and FX, revealing why so many finance leaders find themselves caught off guard by inefficiencies and how they can gain the clarity they need to make smarter decisions.
The CFO’s Challenge: High Costs and Low Visibility
For CFOs of mid-sized businesses, managing international payments often feels like navigating a maze. While it may appear simple to send money from one country to another, the reality is that each transaction is loaded with unseen steps—currency conversions, regulatory checks, banking intermediaries, and more.
This complexity results in fees that can reach 1% to 3% or more of the transaction value, especially for smaller businesses or those without deep banking relationships. These costs are rarely transparent. FX spreads are often embedded in exchange rates, making it difficult to determine the true cost of a transfer. Even more concerning, fees often scale with transaction size, which can significantly impact margins on large payments.
For CFOs tasked with optimizing cash flow and reducing operational costs, this lack of transparency is a major hurdle. Without visibility into how payments are routed and priced—or the ability to compare providers in real time—it’s nearly impossible to make cost-effective decisions.
Operational Inefficiencies Drive Up Costs
Much of the cost in FX doesn’t come from the transaction itself, but from inefficiencies within the process. FX providers must manage treasury operations across multiple currencies and jurisdictions, maintain liquidity in dozens (sometimes hundreds) of bank accounts, and comply with ever-tightening regulations.
These inefficiencies—like idle cash sitting in the wrong currency or delayed compliance checks—ultimately translate into higher fees for customers. And for CFOs, the outcome is often the same: unexpected charges, processing delays, and frustrated stakeholders wondering why international transactions take days instead of minutes.
Why Relationships Matter in FX
While it may be tempting to rely solely on a digital platform or bank portal for FX transactions, seasoned finance leaders know that building a relationship with an FX provider can unlock real value. Strong provider partnerships often lead to better exchange rates, proactive advice on hedging strategies, and faster issue resolution.
However, the FX industry is also known for predatory pricing tactics—low rates offered at the beginning of a relationship, only to increase once the customer becomes comfortable. Savvy CFOs must regularly audit rates, benchmark providers, and understand the true cost structure behind each transaction.
For those handling under $10 million in FX volume annually, it’s rarely efficient to get quotes from multiple providers for every transaction. Instead, partnering with a provider that offers real human insight, timely communication, and strategic advice can be far more effective than chasing algorithmically generated “best rates” online.
Managing FX Risk: The Hedging Trade-Off
CFOs must also wrestle with how to handle FX risk. Waiting to exchange currency until the day of payment means exposure to market swings. A single unfavorable movement in exchange rates can wipe out profits on an international deal. Hedging—locking in a rate in advance—can help mitigate this risk.
But hedging comes with its own trade-offs. Providers offering credit to hedge future payments may charge higher fees or require collateral, reducing working capital flexibility. Businesses with more liquidity may choose to lock in wholesale rates by paying upfront, but this ties up valuable cash.
The decision to hedge, and how to structure it, is deeply tied to the company’s broader financial strategy and capital needs. This is where financial modeling tools come into play.
The Role of Financial Modeling and Forecasting Tools
Financial modeling software can play a critical role in helping CFOs plan for and manage FX exposure. By modeling cash flows, scenario planning, and analyzing what-if situations, CFOs gain a forward-looking view of their currency needs and the potential risks of different market movements.
CFOs can:
- Simulate FX rate changes and their impact on revenue and expenses.
- Compare hedging scenarios to find the optimal balance between cost and risk.
- Track multi-entity cash flows across currencies and jurisdictions.
- Model the timing of payments to take advantage of better FX rates.
- Coordinate with accounting data to ensure forecasts reflect real-time financial performance.
By integrating FX strategy into broader financial planning, CFOs are better equipped to make strategic decisions that protect margins and support growth—even in volatile global markets.
The Future of Payments: Stablecoins and AI
Emerging technologies like stablecoins and AI are beginning to influence how payments are processed and priced. Stablecoins, in particular, are gaining traction in the backend operations of FX providers, allowing them to move money between jurisdictions more quickly and efficiently, avoiding the traditional banking rails.
While crypto has not yet become a mainstream method of B2B payment, its underlying technology is already reshaping how FX providers operate—making transfers faster and potentially cheaper. For CFOs, the takeaway isn’t to replace their current systems with crypto overnight, but to stay informed and prepared as new tools emerge.
Artificial intelligence is also poised to improve FX efficiency by automating compliance, optimizing routing, and providing smarter forecasting—provided that the data it’s fed is clean, complete, and timely. Again, this circles back to the need for accurate, real-time financial data—something only modern forecasting tools can deliver consistently.
What CFOs Should Do Now
- Audit your FX costs regularly. Understand the full fee structure, including spreads, service charges, and hidden costs.
- Evaluate your provider relationship. Build a relationship with an expert who understands your business and can offer strategic guidance—not just a platform that processes transactions.
- Use modeling tools. Implement financial forecasting software to simulate FX impacts and plan proactively.
- Explore hedging strategies. Decide when and how to hedge based on your revenue patterns, cash position, and risk tolerance.
- Stay ahead of innovation. Monitor developments in crypto, stablecoins, and AI to take advantage of efficiencies as they mature.
Conclusion
International payments and FX are no longer niche issues—they’re everyday concerns for mid-market CFOs operating globally. Without visibility, control, and a strategic plan, these costs can quietly erode profitability and disrupt cash flow. But with the right tools, strong provider relationships, and a forward-looking financial strategy, CFOs can turn foreign exchange from a source of stress into a source of strength.
Whether it’s reducing risk, improving pricing, or planning with clarity, the key lies in modernizing the tools and processes that support your financial operations.
If you would like to learn more about this topic, Dryrun’s CEO Blaine Bertsch is joined by Adam Katz, Founder and CEO of Kooltra, for a deep dive into the world of foreign exchange and B2B payments in an episode of FinFactor. Check it out here: https://www.youtube.com/watch?v=5GHIRVSUtyc
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