Purity Global work closely with our risk management experts to ensure they either meet or outperform their budgeted levels. By de-risking their foreign currency exposure, we are able to afford them peace of mind.Purity Global was established in 2004 after a group of experienced retail experts identified an opportunity in the markets to develop quality household products at low cost. Their key specialism is supplying laundry and dishwasher products to UK retailers and the team are passionate about bringing good quality, high value household products to the UK market.They source their products from a variety of factories across Europe, so there is considerable foreign currency exposure. As such, it is vital that they think about the best means of achieving their budgeted rate at the same time as maintaining their margins.The benefits of our personal approachWe contacted Purity Global’s Director, Kriss Hutchinson to try and gain an understanding of his current risk management strategy and see if we could improve it. After a brief introduction, we agreed to go and meet with him at the head office in Hull to discuss Purity’s existing approach in further detail.“What stood out for me in that first meeting was the personal approach that Smart took,” explains Kriss. “It was clear from the outset that your risk management experts had exceptional knowledge and experience.” We were pleasantly surprised to see that Purity Global were already implementing aspects of our Budget, Risk, Solution process, though their providers at that time were adopting too much of an all-or-nothing approach. When we met, his provider was pressuring him to enter into an aggressive leveraged hedge which left Purity knocked in at €1.07 when the interbank rate at that time was €1.14.De-risking the business and protecting budgetsOur experts discussed the idea of not over hedging and managing the risk in smaller chunks to give Kriss a better blended rate. This ensured that the deals agreed would not be skewed in favour of us as the broker, but him as the client. We also discussed hedging for smaller time frames which meant Purity Global would not be overly hedged at potentially poor levels.Given the number of products they sell on the ‘bargain’ end of the price range, Purity Global’s profit margins are necessarily slimmer than other clients that we have dealings with. This means there is less wriggle room and protecting those margins is even more essentialKriss’s budget was tight so we put strategies in place that were based on equalling and/or outperforming that budget level. This afforded Kriss peace of mind, as he knew that his budget would not be negatively affected irrespective of what happened in the currency markets. In short, we de-risked his business through our tailored treasury management approach.We initially started with some short-term forward contracts and spot deals, and then progressed into options contracts. Importantly, we only covered small chunks of his exposure at a time, then constantly produced sensitivity analysis to see how he was performing against his budget rate. This approach allowed for continual tweaking to the strategy as and when required, thereby protecting him against adverse movements at the same time as allowing him to benefit from favourable movements.A relationship where everybody winsAs we were working on extending our business service offering, we realised that, as a manufacturer of certain products, Purity Global might qualify for a R&D tax credit claim. The team are involved in the reproduction of formulations within the factories that produce their products, and their in-house research and development laboratory creates its own cheaper formulations with the same performance.We explained the scheme to Kriss who we then put in touch with one of our service providers. “I didn’t think we had grounds for a legitimate claim, but after discussing it in some detail, we established that we had a decent chance of receiving a rebate,” explains Kriss. “The whole process took three months from beginning to end.”We continue to work closely with Kriss and the team at Purity Global and the relationship we have established is built on trust; we have their best interests at heart where a win for them is a win for us.If you want to know more about how Smart Currency Business can help your business remove uncertainty and mitigate the risks of foreign currency exposure, then email us at firstname.lastname@example.org or give us a call on 020 7898 0500.