Implementing FX risk management best practices

Pact Coffee is a specialist direct-to-consumer coffee manufacturer known for high-quality coffee produced by sustainability-focused farmers around the world. With coffee bean imports paid in US dollars, Pact Coffee is directly exposed to GBP/USD currency fluctuations on a significant portion of its cost base.

Currency fluctuations were always a problem for Pact Coffee, but managing FX risk was never a priority — until the losses became too significant to ignore. Nick Curran, the Finance Director, had been disheartened by a broken promise from a top-tier LSE-listed FX broker who was supposed to advise on managing FX risks but never delivered.

Following substantial losses amid the Pound Sterling crash in September 2023, Nick decided it was time to implement a proper hedging strategy — one he could understand and manage himself, rather than relying on brokers with misaligned incentives.

Nick selected HedgeFlows to help implement a robust FX hedging programme that he could manage himself. With HedgeFlows' advisory support, Pact Coffee built a structured approach to forecasting USD requirements, setting budget rates, and locking in forward contracts — giving the business full predictability over its foreign currency costs months in advance.

Seamless vendor payments, reconciliations and reporting: Pact Coffee now seamlessly combines FX hedging with currency payments and reconciliations through HedgeFlows' Xero integration. Nick plans cashflows and manages FX risks, while Reena, the finance manager, easily allocates prebooked FX to specific invoices — managing accounts and reports with 100% certainty.

100% cost predictability — By hedging foreign currency costs 3+ months in advance, Pact Coffee eliminated the uncertainty that had previously caused budget overruns and margin erosion. The finance team now knows exactly what their USD costs will be in GBP terms, enabling confident pricing and planning.

80% time saving on vendor payments — The Xero integration automates the end-to-end process from invoice approval through currency conversion and payment to reconciliation. What used to take hours of manual bank transfers and spreadsheet tracking now happens in minutes.

Self-sufficient risk management — Unlike the broker-dependent approach that failed them before, Pact Coffee now has full visibility and control over their hedging programme. Nick manages it directly through HedgeFlows, with advisory support available when needed — but without the pressure of broker sales calls.