Whether you’re sourcing materials from overseas or selling products abroad, currency fluctuations can affect your margins and profits. FX-Pro can help you protect profits and keep your margins where you want them.
Company Location: Johannesburg
Nature of Business: Importer/ Distributor
FX Turnover: R 12 million per annum
Currency Exposure: USD
Products: Spot & FEC’s
Like so many South African importers our case study is based on a SME who imports products from China and therefore make regular USD payments. Over the last 2 years the business has faced many challenges particularly in the area of foreign exchange. While they’ve always maintained a strong relationship with the bank they’ve struggled to get any real guidance or support on the FX front.
“The decrease in the value of the Rand has put a tremendous amount of pressure on our business. Not only have we had to deal with a significantly weaker currency but we’ve had to try and manage extreme volatility, a lot of which has been politically driven which is difficult to foresee and protect against. We’ve had to change the way we do business, luckily our suppliers have been accommodating but sometimes even that hasn’t been enough. Our biggest challenge has been around managing customer expectations, product pricing, cash flows and currency exposure all at the same time.
We contacted FX-Pro looking for a better way to protect the business from adverse currency movements. Over the course of the last 8 months we’ve benefited significantly from the relationship both in terms of pricing and strategy. “
We met with the financial management team to get a better understanding of their business and how they operate. We quickly realised they were struggling to maintain consistent pricing which was affecting their profits, client relationships and overall decision making.
The Solution (Improve Strategy & Execution):
We helped the business develop and implement a Forward buying strategy which allowed them to fix the exchange rate for specific orders and for specific periods. Being able to fix the rate upfront on bigger orders or when the rates looked favourable (or likely to deteriorate) enabled the client to maintain consistent pricing while still protecting profits. By working with FX-Pro the company was also able to access much better exchange rates which over the course of the 8 months saved the business in excess of R 85,000.
These are challenges that most SA Importers & Exporters face. They either don’t have the volume needed to be able to negotiate better dealing facilities or they don’t have the information they need to make the right trading decisions. What tends to happen in these situations, the client does one of two things 1) they do nothing which in most cases exposes the business to unnecessary risk or 2) they panic and buy at the worst possible time. That’s where we come in.Our team have the skills, tools and experience to help clients stay in control and make better decisions and we have access to some of the best rates available in the market.