The challenge
An ecommerce business selling through Shopify was exposed to whichever exchange rate applied when Shopify converted its revenues and paid them out.
That left the business with uncertainty over the sterling value of its sales. Its revenue conversion depended on the payout process rather than a currency strategy built around its own needs.
Our approach
OCE arranged a collection account through a payment partner, allowing the business to receive its USD revenues without the automatic conversion it had previously relied on.
We then guided the business on forward contracts. The agreed hedging arrangement fixed the exchange rate for a year of hedged revenue at around GBP/USD 1.30 — approximately US$1.30 for every £1.
The collection account and forward contracts served different purposes: the account gave the business control over its currency receipts, while the contracts fixed the rate for the agreed revenue amounts and settlement dates.
The outcome
OCE reports that the approximately 1.30 level secured for this client was well below the average GBP/USD rate over the subsequent 12 months. The arrangement saved the business thousands.
For a business receiving US dollars and converting them to pounds, a higher GBP/USD rate means each dollar buys fewer pounds. In this case, fixing at the lower rate protected more of the sterling value of the hedged revenues.
No exact trading volumes, savings calculation or dates are disclosed in this anonymised account. The reported outcome is specific to this business; the subsequent annual average is not a dated, payout-by-payout backtest.
What this case shows
Separating revenue collection from currency conversion can help a business plan around its own cash-flow needs. Forward contracts can then provide rate certainty for agreed receipts, rather than leaving every payout exposed to the prevailing rate.
A hedge is not a guarantee of savings. If rates move favourably, a forward contract can mean missing a better later spot rate. Contracts are binding for agreed amounts and settlement dates, and deposits or margin requirements may apply under the provider's terms. Shopify payout compatibility and account availability depend on the business's setup and the provider.