1. Hedging Risk: Businesses often use forward contracts to hedge against potential price volatility. For instance, a company that needs a specific commodity in the future can lock in a price today, protecting itself from price hikes. 2. Customization: Unlike standardized contracts, forward contracts can be tailored to fit the specific needs of the parties involved. 3. No Initial Payment: Typically, no upfront payment is required when entering into a forward contract, making it a flexible tool for businesses.