Case Study - Print Management Company

A UK based print management firm has mail fulfillment contracts with several European companies, who make payments in Euros.

Issues:
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 sterling eventually realized may be less than originally envisaged, due to exchange rate fluctuations.

Solution:
After spending some time consulting with the client, and getting a feel for their currency flows, it was decided that forward contracts would enable the company to hedge their exposure to the Euro, so that each new contract could be properly budgeted in advance, with no ongoing exposure to the exchange rate. By using forward contracts, they not only had access to our preferential exchange rates, but they only had to pay a small deposit, freeing up vital cash flow.