Every business that imports goods must bear in mind a number of key issues when making transactions in foreign currencies. The most important of these are:
- Foreign currency transactions are sensitive to fluctuations in the exchange rate. A price you agree with a customer or supplier on one day could rise or fall if the exchange rate changes. This is especially true in the current economic climate where currency is fluctuating on a daily basis, making it more difficult to keep track of exchange rates.
- If you're importing components or finished goods priced in a foreign currency that form part of goods or range you're selling in sterling, you'll need to decide how to price those goods for the local market.
The Import House adopts a proactive foreign exchange risk management system that negates, on behalf of our clients, any currency fluctuation downside. By guaranteeing a delivered price in GBP you the buyer, our client, are 100% shielded from any adverse movement in the value of the producer’s home currency.
Due to our experience in the industry, The Import House utilises a range of foreign exchange tools, including the contracts shown below, in order to provide our clients with the lowest guaranteed delivered prices for their desired products or materials. This is not only of great benefit when reselling (fixing your profit margin) but also provides peace of mind from order confirmation to delivery to your premises.
- Spot Contracts – If you need to make an immediate international TT a ‘SPOT’ purchase of your required currency is placed. This is simply the exchange of one currency for another at the current market price where the settlement must happen within two working days (T+2).
- Forward Contracts – A Forward Contract allows you to fix a rate now for a date in the future, up to 2 years ahead. This means the rate is fixed regardless of exchange rate movements, thereby protecting you if the exchange rates move against you. They are designed to protect against downside risk.