Case Study Overview

Trade works because people get paid for what they provide. In a world where trade crosses borders, funds need to move efficiently from one currency to another before reaching their final destination. We’ll look at how these product help this process through the eyes of a start-up.

Daily Trade in Global FX Market
$5 trillion
UK's Annual Imports
$620bn
Spot Transaction

A pair of friends design some software that allows businesses to integrate their email, CRM and order management platforms. In doing so they outsource some of the development work to a Canadian coding team. As these are ad-hoc invoices in Canadian dollars they simply sell Pounds and buy Canadian Dollars when an invoice needs payment, calling HCFX, agreeing an exchange rate and sending the required amount of Pounds – HCFX then pays the invoice directly.

Forward

Over time the invoices to Canada start to become larger and more regular and with the startup having raised some funds, they want to budget for their costs in Pounds rather than have to wait and see what the rate of exchange is at the point of paying the invoice. HCFX look at their current development spend and their growth forecasts and implement a series of forward contracts, letting them know how much they’re going to be paying in Pounds on development for the next 12 months – we could have gone as far as five years, but this is still a business in ‘venture’ stage and a lot can change.

Swaps

As time moves on their business is doing well in the UK and they’re now looking at foreign markets. One of those markets is Canada, where they are gaining ground and starting to receive a meaningful income – though it’s not certain when that income arrives and it doesn’t tie up with when their Canadian developer invoices are due. HCFX helps them implement a process by where they use their Pounds to cover the invoices, but can, at the same exchange rate bring their Canadian Dollars back to Pounds as and when they arrive. This eliminates their risk of markets moving, reduces the need to purchase Canadian Dollars and gives their ever growing finance team some more certainty over cost and income levels

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