ILLUSTRATION: MARK FISHER
My company plans to exhibit internationally in 2018. How can I safeguard our budget's accuracy in the face of continual currency fluctuations?
There's little you can do about currency fluctuations or what causes them. However, there are a couple of ways to protect your ability to budget accurately.
➤ Secure quotes in U.S. dollars.
One way to avoid dealing with a foreign currency is to have your international exhibit house and service suppliers provide all quotes and invoices in dollars. Not all of them will grant this request, but when they do, any potential currency risk will be on the supplier side of the equation.
➤ Read the fine print and lock in.
Some firms will list an exchange rate as part of the price quote, along with a stipulation that the price could increase if the currency rate changes. So request that once you sign the agreement, all costs are locked in at the agreed upon rate, thus eliminating the chance of surprises at the close of the show.
➤ Tack on a buffer.
For all services for which suppliers are unwilling or unable to quote you in U.S. dollars, figure some wiggle room into your budget. With every figure you're given, take the current day's exchange rate and add .03 to it. For example, if the rate is 1.09 euros to the dollar, use 1.12. Even if the market inches up against you a bit, your padded budget should be able to take the blow and remain unscathed.
➤ Hedge the exchange rate.
If you have a large project overseas and expect to pay for goods and services in the local cash currency, you may want to look into hedging the currency. This means that you monitor the exchange rate, wait until it's in your favor, and buy currency from the bank in advance of the event. By doing so, you are guaranteed a specific rate, so you don't have to worry about the fluctuations negatively impacting your budget. If you are working on a show a month out, the currency will likely not fluctuate all that much, and hedging may not be necessary. But this strategy can be very helpful if you are planning a large show several months in advance, as a sizable time span provides ample opportunity for wider currency swings.
— Lorraine Lorenzini, global client solutions director, Freeman XP, Avon, MA