A family owned and operated textile company has been in business for 30+ years. The business was successfully managing large product imports from China until the 2020 Covid-19 Pandemic hit.
As with many businesses, this company shifted their business model and took the opportunity to expand their product line and import additional equipment designed for disinfecting surfaces and personal virus protection.The Challenge
The new Chinese suppliers requested to be paid in US Dollars. An unstable market with high volatility and fluctuations in the exchange rate between the Canadian and US Dollar left them vulnerable and exposed to serious losses in profits. They had previously paid all of their suppliers in Canadian Dollars so managing their Foreign Exchange requirements was completely new to them. The company was unaware that they had the ability to manage their foreign exchange needs in order to completely mitigate their risk of profit losses.
The company management along with their accounting team met with Ross Lynch, a Senior Account Manager at Olympia Trust, for a consultation. Ross was able to ask the right questions and listen to their needs and develop an appropriate hedging strategy as Olympia Currency & Global Payments offers a variety of tools and products to assist in these types of situations.
Ross employed a combination of Forward Contracts and Limit Orders in order to minimize the company’s foreign exchange risks and allow them to capitalize on the best rates available at that time. This tactic and strategy allowed the company to set target rates and book those rates for future settlement. Profits were now locked in and guaranteed for the entire year of US Dollar purchases. This has completely eliminated the risk of the US Dollar price rising and eating away at their profit margins.
This company and many others rely on Olympia for their annual hedging strategy and they consider us to be one of their most valuable business partners. Simply planning ahead can add significantly to your annual profit margin. Ross Lynch is available for you anytime to discuss your business needs and help make you aware of your foreign exchange options.
|For more information or to schedule a free consultation, contact Ross Lynch or fill out the form below and he will get back to you as soon as possible.