format_list_bulleted Topic Overview

International Transactions

The Office of the Treasurer (OOT) provides guidance to departments on foreign currency denominated payments and receipts. The office executes foreign currency transactions to assist schools and departments mitigate the impact of foreign currency fluctuations on their operating budget.

Information below is regarding dealing with foreign currencies and foreign currency hedging.

The office assists with processing foreign currency payments including vendor payments, customer receipts and travel reimbursements.


There are a number of business instances in which foreign currencies are applicable, including reimbursing expenses to foreign visitors or U.S. travelers who have incurred expenses in foreign countries, making payments to non-U.S. vendors and receiving foreign currency payments. When making and receiving foreign currency payments, several considerations apply such as the method of payment, getting proper credit for a receipt, country-specific currency rules and U.S. government regulations for payments.

Paying in Foreign Currencies

There are two payment options for foreign currency transactions: wire transfers and foreign drafts.

  • Wire transfers are the fastest but more expensive option for Stanford and the recipient and cannot easily be recalled when issued. A foreign currency denominated wire transfer generally flows through the banking system in two days depending on the time zone of the destination account.
  • Foreign drafts are equivalent to checks, but unlike traditional checks which might take weeks to clear, they have good value within a few days of presentment to the bank in the destination country. Upon creation of a foreign draft, funds are transferred from Stanford’s bank account to a major bank in the destination country. Foreign drafts are the preferred payment option for foreign currency transactions under $1,000, provided the destination country has a reliable mail delivery system. When foreign currency payments greater than $100,000 are anticipated at least a month in advance, departments should consider hedging to set the U.S. Dollar value of the payments.

All foreign currency payments are subject to the Department of Treasury’s Office of Foreign Assets Control (OFAC) regulations that block payments to certain individuals, groups and countries. Payments are checked against the OFAC list both at Stanford and at the bank. Some countries may have currency control restrictions. For instance, the Chinese Yuan cannot be used outside of China. Payments to China must be denominated in U.S. Dollars.

For questions on currency restrictions, please submit a support request to the Office of the Treasurer.

Receiving Overview

Whenever possible, receipts to Stanford should be denominated in U.S. Dollars as foreign currency receipts require special handling. Checks in foreign currencies or drawn on accounts in foreign banks may be rejected for processing. If Wells Fargo does agree to accept and clear the deposit, the fees and charges are substantial and the processing time is six weeks or more. When depositing checks denominated in foreign currency at the bank, call attention to the fact that it is a foreign check, and it will be “rated” or assigned an initial exchange rate. When the checks are fully processed by the bank, a final U.S. Dollar value will be assigned. The Office of the Treasurer will book the final U.S. Dollar amount.

Submit a support request to the Office of the Treasurer if a wire payment denominated in foreign currency is expected in order to ensure prompt identification of the receipt and credit to the correct PTA and department. Foreign currency receipts greater than $10,000 may be converted at a preferred exchange rate if the Office of the Treasurer is notified in advance.

The office consults on whether foreign exchange exposures are suitable for hedging and offers alternatives to mitigate risk.


As a global university, Stanford incurs foreign currency risk derived from its international business activities. Exchange rate fluctuations impact the university’s consolidated financial statements and overseas operations’ cash flows. The university enters into currency hedging transactions for the sole purpose of reducing or eliminating the budget impact of exchange rate fluctuations. Projected receipts and disbursements associated with a transaction may be hedged with two types of instruments:

  • Foreign Currency Spot Contract is an agreement with a financial institution to buy one currency and sell another at or near the current market exchange rate. Spot transactions require an upfront cash payment and usually settle within 2 business days. 

  • Foreign Currency Forward Contract is an agreement with a financial institution to buy or sell a currency at a set exchange rate on a specific date in the future. A forward contract rate is different than the current market rate as it includes a premium or discount that is added to compensate for currency volatility and the length of the contract. The cash payment is not required until the contract matures. Thus, the U.S. Dollar value of a future payment or receipt can be locked in without supplying the cash in advance. 

    Please note that the university does not use option contracts for hedging at this time.

Risks and Implications

Foreign exchange hedging for transactional exposures is offered as a tool to neutralize the budget risk posed by foreign exchange fluctuations associated with a specific activity. It should not be based on an expectation of foreign currency moves. The decision to hedge should be informed by the need to lock in a rate that will stabilize the value of a future commitment and is the sole responsibility of the requesting department.

Accounting Treatment

Foreign currency held at the end of an accounting period is subject to revaluation. The change in U.S. Dollar value of the foreign currency will be booked to the income statement at the Bloomberg PX MID daily market rate, as a realized gain or loss. This rate is available from the Office of the Treasurer or Investment accounting.

The U.S. Dollar value of the cash shown on the balance sheet will also change by an equal amount. Foreign denominated cash that results from a spot transaction will be subject to this accounting. However, the change in U.S. Dollar value of a forward contract does not flow through the income statement until it matures. It is booked as an unrealized gain or loss until maturity.


The Treasurer’s office can help clarify the hedging process, assist internal clients in developing a hedging strategy, offer current quotes and model the impact of various strategies. In order to execute a hedge, complete the Hedge Request Form and submit a support request to the Treasurer’s Office. This form includes the currency and amount to be hedged, information about the underlying exposure being hedged, including executed contracts and departmental information including the PTA to which the transaction should be booked. An authorized signer must execute the hedge request form with spending authority to cover the USD equivalent of the request.

For more information, refer to Administrative Guide Policy 11.6.1: Foreign Currency Hedging

Last Updated: Feb 6, 2023