Writing a corporate forex policy that people actually follow

Most corporate forex policies fail the same way: they are written for the auditor, they run to fifteen pages, and the person booking a trip on a Friday afternoon does not read them. A policy that changes behaviour is short, specific about numbers, and clear about who decides what.

1. 1Who may authorise foreign exchange, and up to what amount. An explicit table, not a description.
2. 2Which provider is used, and the exceptions where another may be used.
3. 3What form currency takes — card versus cash — and the per-destination loading standard.
4. 4How exposure is managed on payables, and who decides to hedge.
5. 5How everything is reconciled and how unused balances come back.

State them as amounts. "Line manager up to USD 2,000; finance head to USD 10,000; CFO above that." A rule with a number in it gets followed. A rule that says "appropriate approval" gets interpreted, and interpretation is how a policy stops existing.

Naming a single provider gives you a rate you have negotiated rather than a rate whoever is travelling happened to find, one invoice format for reconciliation, and a relationship that answers the phone in an emergency. Write in the exception — a country the provider does not cover, a genuine emergency — so people do not have to break the policy to do their jobs.

• Cards for everything beyond the first day. Cash is unrecoverable when lost and unreconcilable when spent.
• A cash standard per destination — a fixed equivalent — rather than a judgement call at the counter.
• Multi-currency cards for multi-country itineraries, single-currency where the trip is to one place. This one rule removes most cross-currency fees.
• Every invoice to carry the company GSTIN, so input credit is not lost.

If the business has foreign currency payables, say what happens: which exposures are hedged, at what size threshold, using what instruments, and who authorises. The purpose is to make the rupee cost predictable, not to have a view on the currency. Say that in the policy, because it is the sentence that stops someone treating the treasury as a trading desk.

1. 1Every transaction matched to a trip or an invoice, monthly.
2. 2Unused card balances above a set threshold reconverted within a fixed period of the traveller returning.
3. 3Encashment certificates and GST invoices filed against the transaction, not in a drawer.
4. 4A quarterly review of realised rate against interbank on the day, which is the only way to know whether your provider is still competitive.

That last point is the one that pays for the policy. Without it, nobody ever finds out that the rate drifted.