A print management firm has mail fulfilment contracts with several European companies who make payments in Euros.
By winning long-term contracts and agreeing to be paid in Euros, the client has a currency exposure. The danger for this client is that a contract can be meticulously costed in advance, but the amount of Dollar eventually realized may be less than originally envisaged due to exchange rate fluctuations.
After spending some time consulting with the client and getting a feel for their currency flows it was decided that forward contracts would enable them to hedge their exposure to the Euro, allowing each new contract to be properly budgeted in advance, with no ongoing exposure to the exchange rate. By using forward contracts they not only had access to our highly competitive exchange rates but they only had to pay a small deposit up front, freeing up vital cash flow.
A leading swimwear distributor buys product from the Far East and sells it in Australia. Quarterly payments are made to suppliers in Hong Kong.
The company buys product a few times per year and needs to get the best possible exchange rate while making sure that suppliers are paid promptly in Hong Kong Dollars. The firm also needs to be able to forecast what their costs will be so they can budget properly and price their products accordingly.
Although the suppliers are only paid once per quarter, TorFX analysts are constantly monitoring the market on the client's behalf and advising them on strategies to help them achieve a favourable rate. For example, our regular market updates can be tailored to specific currency pairs and our forward contracts allow the client to fix their exchange rate for up to 2 years ahead, leaving them free to concentrate on their core business.
Once a currency purchase has been made, TorFX make the payment directly to the supplier by International Funds Transfer. Both supplier and client can elect to receive an internationally recognised payment confirmation as soon as the funds have been sent.
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