What is an FX health audit and why your company might need one

FX is one of the world's most active markets, yet for many companies, it's also the least scrutinised part of their finance function. Whether you're trading modest volumes or managing significant cross-border exposure, even small inefficiencies can quietly cost thousands each year.

The problem isn't just poor rates.

It's that most companies have no idea whether their FX execution is actually any good. This is why we developed our own FX Benchmarker that is designed to uncover the profits Banks and FX Brokers make from your transactions to help you get better visibility.

What Most Companies Miss About FX Costs

Many treasury teams assume their providers are giving them a fair deal. After all, if the quoted rate looks close to the Google or Reuters rate, it must be fine, right?

Not necessarily.

Here's the thing: FX trading happens in real time, and the rates you're offered often include hidden costs. Widened spreads, timing slippage, execution delays, some of these costs go unnoticed because they're embedded in the rate, not itemised on your invoice.

We've seen companies discover they were consistently paying 20-50% more than their competitors, simply because they had no way to measure execution quality against independent benchmarks.

What an FX health check could reveal

An FX Health Audit is a forensic review of your trading activity that compares actual rates against independent market data at the time of execution. Think of it as a health check-up for your historical currency trades.

A comprehensive audit typically includes:

• Trade-by-trade analysis: Every transaction compared to prevailing market mid-rates at execution time
• Hidden cost identification: Slippage and mark-ups that providers don't explicitly show
• Performance trends: Whether execution quality is improving or deteriorating over time
• Counterparty breakdown: Which banks or brokers consistently deliver better rates
• Actionable insights: Specific recommendations for reducing costs and improving executionThe benefits are real:
• Quantify hidden costs: See exactly how much value has been lost to poor execution
• Benchmark counterparty performance: Identify which providers consistently deliver better rates
• Drive strategic improvements: Data to support decisions about multi-bank platforms or pricing negotiations
• Reduce ongoing costs: Often by 20-50% without changing trading volumes

Why traditional monitoring falls short

Most companies rely on basic comparisons, checking their rate against yesterday's close or using generic market averages. Of course, this approach has its place, but it ignores the complexity of real-time execution.

The problem with this approach is that it treats all trades the same. A £10k spot trade and a £10 million forward aren't comparable, yet many monitoring systems don't account for trade size, market conditions, or timing.

What's clear is that treasury teams need analysis that reflects the actual complexity of their trading activity.

How modern FX auditing works

Effective FX auditing analyses every trade individually, using institutional market data to determine what the fair rate should have been at that exact moment. The process is surprisingly straightforward:

• Upload trade data - Export a simple CSV from your treasury system or bank portal with basic trade details
• Automated analysis - Real-time market data benchmarks every transaction for execution quality
• Clear reporting - Visual breakdown showing performance by counterparty, currency pair, and trade size
• Actionable insights - Specific recommendations for improvementMost audits can be completed within days, with no system integration or process changes required.

Time to stop trading blind

If you're managing FX exposure without independent performance measurement, you're essentially flying blind. Market conditions change constantly, and execution quality can vary dramatically between providers and even times of day. For many CFOs and treasurers, an FX audit is an eye-opener. What feels like "just a few basis points" often adds up to significant annual costs that were completely invisible.

It's not that your current approach is broken per se. It's just that modern FX portfolios require transparency that wasn't available when many current processes were designed.

Ready to see what your FX trades actually cost?

An FX Health Audit reveals exactly where value is being lost. Often uncovering savings opportunities that more than justify the analysis. Book your FX audit today or checkout our free FX Benchmarker.