Moneycorp was first introduced to a global publishing business working with one of our partners after they raised a concern over the lack of FX services outside of spot contracts from its bank. The client organisation wanted to explore alternative currency solutions that could offer a wider range of services online and give them access online.

The publishing business received most of its payments in USD, which it describes as its base transactional currency. The initial discovery call with its senior stakeholders also revealed the business also has subsidiaries in Canada, Australia, and the UK and needed regular support facilitating monthly payments of USD into Canadian dollars, Australian dollars, and Sterling.

Approach

At Moneycorp, we know it’s not always easy to see the actual cost of foreign exchange, so our initial approach is to offer potential clients our free FX audit to help paint a clear picture. Moneycorp’s FX specialists took a detailed look at the company’s foreign exchange transactions, including the times and dates of transactions, the exchange rates, the type of products used, what currencies it was trading, as well as the bank charges it was accruing on each transfer.

We compared this against our own fee structure and rates. Moneycorp’s rates are competitive as we source them through our panel of 16 liquidity providers and aren’t bound by a single rate like many banks. Moneycorp’s fee structure is also different, we don’t charge to open a corporate account or to hold currencies, and there are no transfer fees for businesses.

From our initial call, it was clear the company’s currency requirements were complex and would require a specialist strategy to optimise its FX activity. To date, the business has been working out an annual costing level on USD/CAD, USD/AUD, and USD/GBP but has never been able to secure a contract to help accurately budget the year in advance. We introduced the business to our Forward Contract service, showing them how we could secure a set rate for all its FX transactions during the year.

Our audit also uncovered that the client was receiving other currencies into its USD bank account, resulting in the bank automatically converting the funds. We calculated this had cost the business over $10,000 in unnecessary currency conversion fees to date.

The Outcome

This client’s historical data showed an invoice for the company in mid-February 2022, where EUR/USD was at 1.1350. The funds only arrived at the beginning of August, and by then, the rate had fallen, with its bank making the transaction at 1.0250 EUR/USD. This specific invoice was for €200,000, which, when priced in February, would have equated to $227,000.

When the bank converted the funds in August, the amount received was only $205,000. This was a real terms deduction of $22,000, equating to a 10% loss on its contract. With Moneycorp, the organisation could hedge the rates on invoices for future payments, ensuring they were protected against potential currency market risk.

We set up a £2m Credit Line with a 0% deposit to implement the required hedging strategy to protect the business. Since opening an account with us, the client booked ten separate Forward Contracts worth £700k.

The company can now lock in its currency needs in advance, above the costing levels for the next calendar year. Moneycorp has already saved the business approximately $50,000 year on year through its new hedging strategy, as well as saving $10,000 in unwanted fees by providing an account where the client can hold multiple currencies.

A week later, the Parent company approved the strategy, locking in its requirement for the rest of the year.