STANDING UP FOR WORKPLACE COMFORT
Entrepreneur Ryan Holmes knew what he was doing when he invested U.S. dollars in a small Canadian startup venture last January.
British Columbia-based Oristand billed its product as an inexpensive alternative to standup desks, tapping into the growing demand for healthier lifestyles in the workplace as well as out of it.
The loonie was trading at about the US70-cent mark, dipping as low as US68 cents over the month, and Holmes — Canadian founder of Hootsuite — and his partners saw potential not just in the product but also in the timing.
Oristand makes stand-up desks that are placed on top of existing desks or tables. At just US$25, they’re made from foldable industrial cardboard. They’re durable, portable and adaptable to almost any computer and desktop.
Consumers like them. The company, whose payroll and other expenses are in Canadian dollars, has sold more than 20,000 already, mostly in the United States.
Adding to the success was the fact that, in the uncertain world of foreign currency exchange, Oristand was in the right place with the right product at the right time.
“The news went out there and we were flooded with thousands of orders,” says Mark Kerfoot, president of Sprout Accounting, which specializes in cloudbased accounting solutions for companies like Oristand.
Sprout, he adds, “took a bunch of tools we like to use and pretty much hit the ground running in terms of accounting, management and foreign exchange requirements.”
One of those tools was Agility Forex, a Canadian-based fintech company offering highly competitive currency pricing. It was a key decision for a startup looking to mitigate the risks of foreign exchange transactions.
Those risks can have a “massive effect” on the profitability of a company, says Agility Forex CEO Andrew McGuire. “There are an awful lot of companies in a similar situation as Oristand — U.S. revenue and a Canadian cost base. Any tech company that’s based in Canada is effectively going to be in the same situation.”
The best way to mitigate those risks is to be pro-active by setting a currency exchange rate today for a specific date in the future to match the liability — a transaction known as a Forward.
“So if you know you have U.S. dollars coming in next month or in three months’ time, and you have a pretty good idea of how much that’s going to be, you can lock in a currency rate today to settle at that future date,” he says.
“You can take out the whole currency risk.”
Without hedging, the currency might move four or five percentage points, taking your profit margin with it. Agility Forex offers forward rates of up to two years.
“It’s important for companies, especially in times of volatility like we have now, that they manage that future risk.”
Agility Forex does focus on one thing — currency trading transfers — and it does it online. It doesn’t have a lot of overhead to cover, like a bank. So its margins are very narrow. Where a bank might charge two per cent, AgilityForex charges .2 to .4 per cent, depending on the transaction.
For companies and individuals, it can mean savings of hundreds, if not thousands, of dollars. “Our currency rates are a lot more aggressive than what the banks give,” says McGuire. “It’s a much better deal and customers save money.
“We get our pricing direct from the interbank market, so we don’t have to go through banks, we don’t have to go or through middlemen, to access the market. We have a much more efficient system than the banks and we don’t have their overheads [or] their cost base, so that means we can be a lot more competitive.”
Currency exchange is a common challenge among startups. Many earn their revenue in U.S. currency, or their funding is out of the United States. Startups are typically focused on their products, getting into markets and building sales momentum. But currency issues can hurt their business model, and most don’t have the expertise or time to manage that risk.
“Every dollar counts when you’re a startup,” says McGuire. “So while they’re working hard trying to get market share and growing their business, it’s important to make sure they’re not losing money through the back door by ignoring what is in reality an easily manageable risk. “
That’s where Agility Forex comes in. Kerfoot says the simplicity and transparency of Agility Forex’s trading practices platform has saved him time, money and effort.
“It was a real refreshing change for me.”