Solutions
for Importers
Scenario
1
An
US Importer places an order for goods from France, payable in
euros in 60 days. The current dollar /euro market conditions are
currently favorable to the importer.
Q:
How can this importer protect himself from the unforeseen foreign
currency fluctuations in the next two months, which significantly
can alter the outcome of this transaction?
A:
With InterCredit, Inc doing business beyond your borders does
not compound risk. We have available a variety of hedging tools
that will help you manage the risk inherent in currency markets
by predetermining the rate and date on which you will purchase
or sell a given amount of foreign exchange.
Using
InterCredit’s Hedging tools such as Forward Contracts, you
can:
• Protect
costs on products and services purchased abroad
• Protect profit margins on products and services sold
abroad
• Lock-in exchange rates as much as a year in advance
InterCredit,
Inc. offers two types of Forward Contracts: Closed and Open.
Closed Forwards specify an exact settlement date.
Open Forwards provide for a window of time - from one week to
three months - for settlement.
Any part of an Open Forward may be settled at any time within
the window, but the whole amount must
be settled prior to the maturity of the contract.
Scenario
2:
Q: US Importer receives an
invoice in euros and forward payment with a US dollars check using
the newspaper exchange rate. Is this beneficial to the importer
and its business relationship with its supplier?
A: Paying foreign suppliers
in domestic funds can easily result in underpayment or, equally
unfortunate, overpayment, as currencies fluctuate between the
time payment is issued and the time it clears. Foreign suppliers
may also be displeased as they await clearance of your checks.
InterCredit’s Foreign Currency Drafts provide payment in
your beneficiary's currency without imposing lengthy delays while
awaiting clearance of a check from abroad.
We
can
• Dramatically
reduce the time required to access funds
• Issue drafts in a wide variety of currencies
• Save you money with an economical way of making global
payments
InterCredit, Inc., maintains accounts in major trading nations
that allow us to issue drafts in the nation and currency where
payment is due. In doing so, you ensure that the recipient of
your payment has quick access to funds.
Strengthen global business ties by providing exact payment in
a timely manner with Foreign Currency Drafts from InterCredit,
Inc.
• We endorse those payments to your company, and deduct $10.00
Scenario
3:
A U.S.
company, which pays on a regular basis a supplier in Europe, locks
a forward rate with InterCredit, Inc., at $0.8879 per euro for
a payment due in six weeks.
Six
weeks later, when the payment is due, InterCredit, Inc. assesses
the current US dollar market condition and realizes the dollar
is 3% stronger at $0.8612.
Q:
How can the importer benefit from the current stronger dollar
situation, considering the fact that he already locked the forward
rate at $0.8879?
A:
At this point,
is when InterCredit’s Risk Management expertise takes place.
Because of the higher current dollar value and customer’s
profile, it is suggested to rollover the forward contract and
covers that payment with the current better rate. In this way
our customer will be able to take full advantage of the current
market condition.
Due
to InterCredit’s expertise and large dealing volume, we are
able to offer this uncommon level of flexibility that no other
financial institution is willing or able to offer.
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