Paying International Suppliers
Common for manufacturers, retailers, distributors
Your Situation: You source materials or products in USD or EUR but operate in CAD. Exchange rate swings directly impact your cost of goods sold.
The Challenge: When CAD weakens, your margins get squeezed. You can't always pass costs to customers immediately.
Our Strategy: Layered hedging with forward rate thresholds. Lock in rates gradually when favorable, protect aggressively when unfavorable.
Example Rules:
- Target 80% coverage for 0-3 months, 60% for 3-6 months
- Only hedge if forward rate beats your budget rate
- Increase layer size when spot moves 3% above 6-month average
- Monthly hedging frequency, 6-month maximum tenor