How the Right Partner Can Make Foreign Exchange a Less Foreign Concept

Touchstone Home Products has roots that originated 38 years ago and has since grown to be an industry leader in electric fireplaces, patio heaters, TV lift cabinets, and other home goods.

The company has continually exceeded customer expectations, and as the business evolved, took an interest in electric fireplaces — a product that was only available for production in China. After visiting a manufacturing facility, they decided to take a chance and ordered their first container of fireplaces. The leap has proven to be worthwhile, as electric fireplaces now comprise the majority of Touchstone’s business.

With a product solely produced in a foreign country, Touchstone increasingly saw the value in finding a banking partner who could nimbly anticipate their needs and help them navigate the complex world of foreign exchange (FX) and import tariffs – something they were unfamiliar with.

Despite being with a national bank for many years, they were continually frustrated by a lack of support. They needed a lender who would walk them through their challenges but also offered international services.

The Touchstone team quickly saw the difference in the hands-on guidance they received after taking another leap – this time to a local banking partner, WSFS Bank. The lessons Touchstone has learned along the way can be helpful for any business importing from other countries and in educating themselves about the foreign exchange market.

Lessons Learned
“I felt like I could talk to these people,” said Frank Quinlisk, owner of Touchstone Home Products. “Sometimes when you talk about these things, there are a lot of acronyms and a sense that if you can’t keep up, you’re being looked down on. WSFS wasn’t like that and made sure we understood everything.”

For example, Touchstone was able to transition from paying their Chinese suppliers in USD to using Chinese yuan— a tactic their previous bank had never introduced them to. The move proved to be a beneficial shift for everyone involved, as the exchange rate of U.S. dollar was not only impacting Chinese employees negatively, but the transition itself resulted in an improved margin of 3% for the business overall.

“Importers like Touchstone experience hidden costs when paying foreign suppliers in U.S. dollars. The first step for the WSFS Capital Markets Team is always to bring to light and quantify these costs through a comprehensive invoice analysis, but the conversation does not stop there. Once invoicing is transitioned to local currency, our team works with customers like Touchstone to create a customized hedging solution to reduce currency risk and ultimately achieve significant savings,” said Mitchell Clarke, Vice President, FX Marketer and Trader, WSFS Bank.

Perhaps most importantly, the partners at Touchstone felt they were learning more about what their business could do thanks to the education WSFS provided them.

“When we started, WSFS would reach out to us to go through the payment process,” added Quinlisk. “He’d say, ‘ok, there are five payments tied to this order. It might be beneficial to lock in the exchange rate for the first three before the market shifts.’ It was truly collaborative, and as we’ve learned more, we’re better able to lock in our exchange rate as needed.”

Now, Touchstone feels prepared to make strategic moves regardless of the economic conditions, so they are prepared for the future.

Because of their relationship with WSFS, Touchstone can now anticipate a strategy for purchases based on potential tariff end dates. Although tariff fees remain high, for Touchstone the expense has been balanced by the savings they benefit from with their new FX strategy.