For companies that do business all over the world, there is seemingly no shortage of challenges to overcome.
Currency exchange and inflation rates that vary from country to country are enough to keep an executive tossing and turning at night. And that is to say nothing of language barriers and the nuances of foreign politics and policy.
Barsky-Fleming Marketing, a Philadelphia-based furniture importer, is one such company that knew there were efficiencies available that could help it grow and capitalize on market conditions. That’s why Jeffrey Barsky, President at BFM, turned to WSFS Bank. The bank’s hallmark is making its clients more effective in what they seek to accomplish through best-in-class education, capabilities, execution, and support.
BFM began its relationship with WSFS in 2020 with a mortgage on its warehouse, cash management services, and a revolving line of credit, and it wasn’t long before BFM began utilizing the bank’s range of international services.
“Our Capital Markets team is really savvy and are able to come up with strategies to maximize efficiency and reduce currency exchange rate risk,” said Graham Palusky, Vice President, Senior Relationship Manager at WSFS Bank. “Our international specialists are exceptional at positioning their service and are good educators who are not afraid to share opinions. I could see this collaborative approach between Jeff and our foreign exchange team taking shape, and they came up with something that made sense for this specific company in this specific environment.”
BFM regularly purchases goods across borders from foreign sellers and especially needed to fund upcoming imports in Euros for furniture deliveries. With the help of WSFS Bank’s Capital Markets team, BFM saw the weaker Euro against the U.S. dollar as an opportunity to lock in the cost of its Euro imports for three months by executing a “window” FX forward contract. Using this strategy, BFM bought Euros at a pre-determined and very advantageous rate, for a time frame it felt comfortable with, up to the amount of its contract.
“Companies like BFM use window forwards to manage their foreign exchange exposure,” said J.C. Fernandez-Seoane, Senior Vice President, Director of Foreign Exchange for WSFS Capital Markets. “FX forward contracts enable them to fix the cost of their imports or the receipts of their exports in advance, therefore avoiding cost volatility. A window forward offers even more flexibility by allowing the purchaser to not only lock in the exchange rate for a future date, but for an open period during which it can be settled, hence the ‘window’ aspect of the product.”
With the added pressures of inflation, leveraging this market hedging tactic can potentially offset the inflationary pressure companies will feel to buy. Some key benefits of leveraging window forwards include:
- Importers are able to purchase goods and services from abroad in local currency, therefore avoiding any foreign exchange surcharge applied by the foreign seller.
- Exporters can price their sales in their clients’ currency, therefore eliminating any foreign currency risk for their customers.
- Both importers and exporters can lock in the rate at which U.S. dollars will be exchanged for the foreign currency (or vice versa) and can have certainty of the U.S. dollar amount paid or received.
- Window forwards enable customers to decide when to buy or sell the foreign currency within the time frame agreed with the bank (and up to the agreed-upon amount).
“This recommendation was a sound and strategic move for us, especially with economic conditions changing so rapidly,” said Barsky. “The biggest business benefit of using the window forward for us has been peace of mind.”
Learn more about WSFS Bank’s Capital Markets team.