| Situation
A luxury car dealer imports high-end sports cars from Europe. The company always plans ahead for new model launch dates and needs to secure import orders well in advance. The company is also occasionally invited to bid on pre-release models, providing unique opportunities to be the first on the market with new products. Due to the large costs associated with importing luxury cars, purchasing foreign currency upon invoice can substantially impact the luxury car dealer's bottomline if the market is not favourable. The company needs to plan in advance for future purchases on launch dates and have foreign currency available for unexpected bidding opportunities. |
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Solution
Ruesch offers Forward Contracts that let clients lock in a rate of exchange in advance for delivery of funds on a future date. Once a rate is secured, the settlement currency equivalent is fixed for the duration of the contract, thereby protecting profits from erosion. Because rates can be locked in up to a year in advance, companies can monitor the market for favourable rates and secure funds for upcoming needs. Additionally, Ruesch's Foreign Currency Holding Balances help clients maintain short-term reserves of foreign funds from the disbursement of Forward Contracts, Standing Orders, or Spot Transactions. |
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Outcome
By securing Forward Contracts, the luxury car dealer had funds available to use throughout the year. When contracts matured, the currency could be applied to invoices or stored in its Foreign Currency Holding Balances. With its foreign currency rates secured, the company could concentrate on upcoming model launches and be prepared for business opportunities that came their way. |
