Fashion: The relevance of currency for import and export
Fashion companies tend to engage in significant import and export activity, which is often shaped by the creative process. This entails:
- A substantial volume of purchases from suppliers, especially from Asia. This generates recurring payments, chiefly in dollars.
- Sales in international markets, often through e-commerce in addition to bricks and mortar. This creates exposure to exchange rate fluctuation for local currencies.
- Per-collection pricing policies, with prices remaining stable throughout the season. Depending on the exchange rate, this factor can impact seasonal profitability.
- A need to manage the currencies affecting cash flows.
Managing exchange rate risk in the fashion sector
Due to their international profile, fashion and e-commerce firms particularly stand to benefit from optimising their currency management in the following ways:
Streamlining international payments
Clear and transparent pricing, alerts to keep on top of exchange rates, plus automatic orders make it easy to implement an effective currency policy, which is key to substantially reduce the cost of international payments and collections.
Efficient hedging strategies
A hedging system ensuring favourable exchange rates (with no spread and including all forward points) allows you to protect profit margins and leverage positive market movements. Another benefit is added flexibility when setting prices for the season ahead.
Agility and traceability
Gain speed and traceability thanks to automatic SWIFT messages, facilitating dealings between clients and suppliers, and so also enabling faster shipping of goods. The SWIFT message makes it easy to track funds at all times throughout the process.
“C’est un gros avantage d’avoir accès à non seulement des dollars américains mais aussi à des renminbi/yuan au taux officiel du marché, cela nous permet de mieux gérer le risque de change nous-mêmes”