Spot foreign exchange contracts provide the fastest way to convert one currency to another – useful in handling payables or receivables involving foreign currencies.
For most currencies, payment typically takes two business days. Payments in advance, open account settlements, and letters of credit all can be handled through spot contracts, a simple but effective way to make payments internationally.
Here are two examples:
Foreign Currency Payable
Example: Your company purchases auto parts from Japan. The invoice is received and due in Yen immediately. California Bank & Trust can pay the full Japanese yen amount and debit your account for the US dollar equivalent.
Foreign Currency Receivable
Example: Your company sells computer equipment to Canada. The Canadian buyer agrees to make payment in Canadian dollars as soon as the equipment is received. The customer is given California Bank & Trust's Canadian banking procedure instructions so we can convert the Canadian currency to the US dollar equivalent and credit those US dollars to your account.
For more information on using spot contracts, contact a Foreign Exchange Trading Specialist.