Barsky Fleming Uses Foreign Exchange Strategies to Fight Inflation and Market Volatility

Furniture Importer Takes Advantage of Strong U.S. Dollar in First-of-its-Kind Transaction at WSFS

Jeffrey Barsky, President at Barsky Fleming Marketing Inc. (BFM), has been importing furniture since the mid-90s. The company grew over time to import restaurant furniture from various countries including China, Vietnam, Turkey, Italy, Bulgaria, Germany, and more. In dealing with so many countries and currencies, Barsky knew there were efficiencies available that could help the business grow and capitalize on market conditions.

“I’ve experienced mortgage rates at 14%, I thought the tariffs were a challenge, but none of that was anything compared to the impact of COVID,” Barsky recalled.

BFM began its relationship with WSFS in 2020 with a mortgage on their Philadelphia warehouse, cash management services, and a revolving line of credit. Through the company’s longstanding work with Graham Palusky, Vice President, Senior Relationship Manager at WSFS Bank, new services came to light that could help Barsky and his team in their unique position leveraging foreign exchange.

“Our Capital Markets team is really savvy and are able to come up with strategies to maximize efficiency and reduce currency exchange rate risk,” said Palusky. “Our international specialists are exceptional at positioning their service and are good educators who are not afraid to share opinions. I could see this collaborative approach between Jeff and our foreign exchange team taking shape and they came up with something that made sense for this specific company in this specific environment.”

A Window of Opportunity

BFM regularly purchases goods across borders from foreign sellers and especially needed to fund upcoming imports in Euros for furniture deliveries. With the help of their team at WSFS, BFM saw the weaker Euro against the U.S. dollar as an opportunity to lock-in the cost of their Euro imports for the next three months by executing a “window” FX forward contract. Using this strategy, BFM bought Euros at a pre-determined and very advantageous rate, for the time frame they felt comfortable with, up to the amount of their contract.

“Companies like BFM use window forwards to manage their foreign exchange exposure,” explains JC Fernandez-Seoane, Senior Vice President, Director of Foreign Exchange for WSFS Capital Markets. “FX forward contracts enable them to fix the cost of their imports or the receipts of their exports in advance, therefore avoiding cost volatility. A window forward offers even more flexibility by allowing the purchaser to not only lock in the exchange rate for a future date, but for an open period during which it can be settled, hence the ‘window’ aspect of the product.”

With the added pressures of inflation, leveraging this market hedging tactic can potentially offset the inflationary pressure companies will feel to buy. Some key benefits of leveraging window forwards include:

• Importers are able to purchase goods and services from abroad in local currency, therefore avoiding any foreign exchange surcharge applied by the foreign seller.
• Exporters can price their sales in their client’s currency, therefore eliminating any foreign currency risk for their customers.
• Both importers and exporters can lock-in the rate at which U.S. dollars will be exchanged for the foreign currency (or vice versa) and can have certainty of the U.S. dollar amount paid or received.
• Window forwards enable customers to decide when to buy or sell the foreign currency within the time frame agreed with the bank (and up to the agreed upon amount).

“This recommendation was a sound and strategic move for us, especially with economic conditions changing so rapidly,” said Barsky. “The biggest business benefit of using the window forward for us has been peace of mind.”