--- title: The WHY of Hedging | Corpay description: "The WHY of Hedging: Why you might or might not hedge depends on your business" image: https://cb.corpay.com/hubfs/Imported_Blog_Media/1.jpg --- [Skip to content](https://cb.corpay.com/resources/blog/the-why-of-hedging#main-content) ![Corpay Cross Border Payments](https://cb.corpay.com/hs-fs/hubfs/Corpay_Final-Logo_No-TM_Two-Tone_Black.png?width=130&height=35&name=Corpay_Final-Logo_No-TM_Two-Tone_Black.png) - [Blogs](https://cb.corpay.com/resources/blog) - [Whitepapers](https://cb.corpay.com/resources/whitepapers) - [Case Studies](https://cb.corpay.com/resources/case-studies) Open main navigation Close main navigation - [Blogs](https://cb.corpay.com/resources/blog) - [Whitepapers](https://cb.corpay.com/resources/whitepapers) - [Case Studies](https://cb.corpay.com/resources/case-studies) - [Contact us](https://www.corpay.com/contact-us/cross-border) [Contact us](https://www.corpay.com/contact-us/cross-border) Nov 14, 2023 # The WHY of Hedging ![Picture of Corpay Cross-Border](https://cb.corpay.com/hs-fs/hubfs/Brand%20Logos/Corpay_Final_Avatar_caret_dark.png?width=50&name=Corpay_Final_Avatar_caret_dark.png) [Corpay Cross-Border](https://cb.corpay.com/resources/blog/author/admin) Share: [facebook-f icon](http://www.facebook.com/share.php?u=https://cb.corpay.com/resources/blog/the-why-of-hedging) [Share this page on LinkedIn](http://www.linkedin.com/shareArticle?mini=true&url=https://cb.corpay.com/resources/blog/the-why-of-hedging) [Share this page on Twitter](https://twitter.com/intent/tweet?url=https://cb.corpay.com/resources/blog/the-why-of-hedging) [Share this page on Email](mailto:?body=https://cb.corpay.com/resources/blog/the-why-of-hedging) # **The WHY of Hedging:** **Why you might or might not hedge depends on your business** As a business owner involved in import or export or both, your focus is more likely to be generating more sales, not worrying about where the USD/SGD is going or where EUR/USD is going. **To hedge…** To break it down simply, if you go down the ‘to hedge’ path, what do you get? You get certainty of gross margin and cashflows. You get reduction of volatility of income and you get ease of planning. If you decide not to hedge, you might have an outcome that outperforms compared to if you had hedged. However, what you will get is uncertainty of gross margin and cashflow, and a potential increase in volatility of your income, which may make it more difficult to plan. If you don't know what your cashflow is going to look like over the next six months or you don't know how much profit you're going to have, it becomes very difficult to plan for the future. Many businesses have fixed costs, such as overhead, and variable costs, such as sales revenue and the cost of goods sold. An adverse move in the currency—in your cost of goods or your sales revenues—can affect your gross profit margin adversely. In this scenario, you may consider hedging to reduce income statement volatility and volatility of local earnings. It's as simple as that. If you want certainty, embracing the currency hedging path could be a good option. Another reason why you might hedge is to help protect cashflows which could help ensure your profitability stays consistent and predictable, and likewise, your cashflow. **Or not to hedge** There are a few circumstances where hedging might not be appropriate for you. Firstly, if you’re not 100% committed to creating and implementing your currency hedging strategy, you might not wish to hedge as there is a chance you will be unhappy with the outcomes. Secondly, speculative hedging is not supported by Corpay. Thirdly, if you have no FX risk due to the way you price your products/services, why would you create risk by hedging? Lastly, if you don’t fully understand the product you’re using and the potential outcomes, don’t proceed: get more information and seek professional advice. [Download your copy](https://assets.ctfassets.net/h83dujey17us/7mfDFCOBSAgOe0wBVXhxy5/ee67d839187452941e0657ede054eaed/The_Why__How_and_What_of_Hedging_Currency_Risk_-_The_WHY.pdf) [Alternatively, click here to read the entire program!](https://cross-border.corpay.com/why-how-what-of-hedging/) [Currency Risk Management](https://cb.corpay.com/resources/blog/tag/currency-risk-management) ## Related posts [![](https://cb.corpay.com/hs-fs/hubfs/Imported_Blog_Media/clark-van-der-beken-WGyeB1YsBKU-unsplash.jpg?height=200&name=clark-van-der-beken-WGyeB1YsBKU-unsplash.jpg)](https://cb.corpay.com/resources/blog/foreign-exchange-hedging) [Currency Risk Management](https://cb.corpay.com/resources/blog/tag/currency-risk-management) ## [5 questions to ask before your company considers foreign exchange hedging](https://cb.corpay.com/resources/blog/foreign-exchange-hedging) ![Picture of Darryl Hood](https://cb.corpay.com/hs-fs/hubfs/Imported%20sitepage%20images/image-Jul-15-2025-05-34-38-5901-PM.webp?width=50&name=image-Jul-15-2025-05-34-38-5901-PM.webp) [Darryl Hood](https://cb.corpay.com/resources/blog/author/darryl-hood) Dec 7, 2021 If your company is weighing up the pros and cons of foreign exchange hedging, take a look at our... [Read more](https://cb.corpay.com/resources/blog/foreign-exchange-hedging) [![](https://cb.corpay.com/hs-fs/hubfs/Imported_Blog_Media/willian-justen-de-vasconcellos-LxCm6aElVqI-unsplash.jpg?height=200&name=willian-justen-de-vasconcellos-LxCm6aElVqI-unsplash.jpg)](https://cb.corpay.com/resources/blog/the-clear-and-covert-advantages-of-paying-in-local-currency) [Global Payments](https://cb.corpay.com/resources/blog/tag/global-payments) ## [The clear (and covert) advantages of paying in local currency](https://cb.corpay.com/resources/blog/the-clear-and-covert-advantages-of-paying-in-local-currency) ![Picture of Corpay Cross-Border](https://cb.corpay.com/hs-fs/hubfs/Brand%20Logos/Corpay_Final_Avatar_caret_dark.png?width=50&name=Corpay_Final_Avatar_caret_dark.png) [Corpay Cross-Border](https://cb.corpay.com/resources/blog/author/admin) Oct 31, 2024 The clear (and covert) advantages of paying in local currency Congratulations – your business is on... [Read more](https://cb.corpay.com/resources/blog/the-clear-and-covert-advantages-of-paying-in-local-currency) [![](https://cb.corpay.com/hs-fs/hubfs/Imported%20sitepage%20images/image-Jul-29-2025-08-00-30-7314-PM.webp?height=200&name=image-Jul-29-2025-08-00-30-7314-PM.webp)](https://cb.corpay.com/resources/blog/ask-the-auditor-cross-country-observations-on-hedge-accounting) [Currency Risk Management](https://cb.corpay.com/resources/blog/tag/currency-risk-management) ## [Ask the Auditor: Cross Country Observations on Hedge Accounting](https://cb.corpay.com/resources/blog/ask-the-auditor-cross-country-observations-on-hedge-accounting) ![Picture of Sean Coakley](https://cb.corpay.com/hs-fs/hubfs/Imported%20sitepage%20images/Sean%20Coakley.jpg?width=50&name=Sean%20Coakley.jpg) [Sean Coakley](https://cb.corpay.com/resources/blog/author/sean-coakley) Sep 20, 2024 A Note on Hedge Accounting Hedge accounting standards under US GAAP fall under the Financial... [Read more](https://cb.corpay.com/resources/blog/ask-the-auditor-cross-country-observations-on-hedge-accounting) --- [![Corpay Cross Border Payments](https://cb.corpay.com/hs-fs/hubfs/Corpay_Final-Logo_No-TM_Two-Tone_Black.png?width=130&height=35&name=Corpay_Final-Logo_No-TM_Two-Tone_Black.png "Corpay Cross Border Payments")](https://www.corpay.com/cross-border) [linkedin-in icon](https://www.linkedin.com/showcase/corpay-cross-border-solutions/) [X Twitter icon](https://twitter.com/CorpayFX) [vimeo-v icon](https://vimeo.com/corpay) [microphone icon](http://corporate-payments.corpay.com/fintech-in-focus-podcast/) [Follow us on Facebook](https://www.youtube.com/@CorpayCrossBorder) --- ## "Cambridge Global Payments” and “AFEX” are trading names that may be used for the international payment solutions and risk management solutions provided by certain affiliated entities using the brand “Corpay”. International payment solutions are provided in Australia through Cambridge Mercantile (Australia) Pty. Ltd.; in Canada through Cambridge Mercantile Corp.; in Switzerland through Associated Foreign Exchange (Schweiz) AG; in the United Kingdom through Cambridge Mercantile Corp. (UK) Ltd.; in Ireland and the European Economic Area on a cross-border basis through Associated Foreign Exchange Ireland Ltd.; in Jersey and the Channel Islands through AFEX Offshore Ltd.; in Singapore through Associated Foreign Exchange (Singapore) Pte. Ltd. and in the United States through Cambridge Mercantile Corp. (U.S.A.). Risk management solutions are provided in in Australia through Cambridge Mercantile (Australia) Pty. Ltd.; in Canada through Cambridge Mercantile Corp.; in the United Kingdom through Cambridge Mercantile Risk Management (UK) Ltd.; in Ireland and the European Economic Area on a cross-border basis through AFEX Markets Europe Ltd.; in Jersey and the Channel Islands through AFEX Offshore Ltd.; in Singapore through Associated Foreign Exchange (Singapore) Pte. Ltd. and in the United States through Cambridge Mercantile Corp. (U.S.A.). Please refer to http://cross-border.corpay.com/brochure-disclaimers for important terms and information. ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Corpay Cross-Border", "url" : "https://cb.corpay.com/resources/blog/author/admin" }, "dateModified" : "2025-07-29T19:56:41.769Z", "datePublished" : "2023-11-14T14:30:00.000Z", "headline" : "The WHY of Hedging | Corpay", "image" : [ "https://cb.corpay.com/hubfs/Imported_Blog_Media/1.jpg" ], "mainEntityOfPage" : { "@id" : "https://cb.corpay.com/resources/blog/the-why-of-hedging", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://cb.corpay.com/hubfs/Corpay_Final-Logo_No-TM_Two-Tone_Black.png" }, "name" : "Corpay" } } ```