Lesson 5 · Advanced · Both · 26 min
Hedging for SCF & Export Factoring
Practical hedge choices—forwards, natural hedges, and policy—for platforms financing exporter receivables.
Objectives
- ▸Choose between natural hedge, spot laddering, and forwards
- ▸Define hedge policy elements PMs should document
- ▸Identify operational risks (timing mismatch, overhedge)
- ▸Align customer disclosures with who owns FX P&L
Hedging reduces uncertainty; it does not maximise FX gains. For SCF, the usual objective is to protect margin on advances and keep customer pricing predictable—not to speculate on USDINR.
- Natural hedge: match currency of funding and receivable.
- Forward cover: lock conversion for expected collection date.
- Layered hedges: partial cover when invoice timing is uncertain.
Key terms
Hedge ratioNatural hedgeOverhedgeUnwindMargin protection