Collection float and Currency risk: Difference between pages

From ACT Wiki
(Difference between pages)
Jump to navigationJump to search
imported>Doug Williamson
(Identify the components of collection float. Source: ACMF October 2016, p34.)
 
imported>Doug Williamson
(Layout.)
 
Line 1: Line 1:
The time interval between a payer (or payor) making a payment and the beneficiary receiving value.  
The risk that arises from a change in currency rates.


Collection float results in an opportunity cost or loss to the person collecting.  
This can take the form of:
#A receipt/payment of more or less home currency than expected when a transaction is settled (transaction risk)
#A change in asset/liability values in a balance sheet, profit /loss in an income statement (translation risk), or
#A change in competitiveness as rates change relative to buyers, suppliers or competitors (economic risk).


A more complex area of risk concerns contingent, or pre-transaction risk.
Also known as Currency exposure or Foreign exchange risk.


Depending on the payment instrument, collection float may include:
*Transit float
*Processing float
*Clearing float


== See also ==
== See also ==
*[[Clearing float]]
* [[Contingent risk]]
*[[Disbursement float]]
* [[Cross-currency interest rate swap]]
* [[Float]]
* [[Foreign exchange risk]]
*[[Processing float]]
* [[Transaction exposure]]
*[[Transit float]]
* [[Translation exposure]]
 
 
===Other links===
[http://www.treasurers.org/node/5281 Currency risk, Will Spinney, ACT 2009]


[[Category:Cash_management]]
[[Category:Manage_risks]]

Revision as of 08:58, 11 May 2015

The risk that arises from a change in currency rates.

This can take the form of:

  1. A receipt/payment of more or less home currency than expected when a transaction is settled (transaction risk)
  2. A change in asset/liability values in a balance sheet, profit /loss in an income statement (translation risk), or
  3. A change in competitiveness as rates change relative to buyers, suppliers or competitors (economic risk).

A more complex area of risk concerns contingent, or pre-transaction risk.

Also known as Currency exposure or Foreign exchange risk.


See also


Other links

Currency risk, Will Spinney, ACT 2009