It will no longer be necessary, for example, to review daily balances in multiple currencies.
Most companies try to match their planned payments or receivables with term purchases of currencies.
Such methods can only serve to cover certain cash flows within a limited time frame. This creates the need to justify the regular losses on hedging contracts. Foreign exchange transactions include a cost related to the currency risk as well as a lesser cost that is due to the actual transfer of money from one country to another. It is expected that these transfer costs will diminish as banks develop more efficient international payment systems. Reduction in working capital needs Most companies attempt to monitor balances in respective currencies to limit excess liquidity with small financial returns or to avoid the negative balances which can lead to high overdraft costs.