Success Stories > Foreign Exchange Costs Rationalized

Foreign Exchange Costs Rationalized

An American manufacturing company with facilities in Europe, China and Mexico does approximately $25 million in Foreign Exchange (FX) transactions per year. These transactions involve both buying and selling a number of different currencies. FX transactions are attached to several treasury functions, including foreign supplier payments, subsidiary funding, foreign product sales, receipt of payments, repatriation of funds, and investing. Treasury operations are carried out in both the USA and Europe. The company makes both spot and forward contract purchases/sales.

LES analysts were asked by the Company to analyze currency trades by supplier and by currency pair, among others parameters, to see what the Company was actually paying in mark-ups on FX transactions. It took the Company just a few minutes to forward all of its trade data electronically. LES analysts then examined each of the Company's FX trades from the previous 6 months and compared them to the actual market spot and forward rates at the minute each trade was made. LES maintains a unique archived FX database, which is updated by the minute, to give clients a true rate comparison. LES reported back in detail to the Company breaking out each trade by supplier margin and by 8 other trading parameters. Armed with these LES reports, the Company was able to negotiate a full 1% savings in FX rate mark-ups from its suppliers, saving it in excess of $250,000 per annum.