ABC Ltd. purchases furniture from China with US dollars and uses Currency UK for its foreign exchange requirements. XYZ Ltd. also purchases furniture from China in US dollars but buys them from its bank.

In April 2005, both companies agree contracts by which they buy $25,000 of furniture each month for the next 10 months. Both companies can afford to buy all the currency on this date, however only ABC Ltd. choose to do so at a rate of 1.9050 As they have no US dollar account they choose to leave the money on account with Currency UK. As they have already costed everything at a rate of 1.8500 they are already making a profit of £3,901.54 simply on the foreign exchange.

As the months go on, the US dollar continues to strengthen against sterling, XYZ Ltd. has no protection against this and continues to buy its US dollars from its bank at a spot rate. ABC Ltd. enjoys a constant rate of 1.9050, For XYZ Ltd. it all becomes more and more expensive. The dollar continues to strengthen as follows:

1.8900 in April
1.8700 in May
1.7925 in June
1.7250 in July
1.7700 in August
1.8300 in September
1.7300 in October
1.7050 in November
1.7600 in December
1.7720 in January

ABC Ltd. has paid a total of £131, 233.60 for their furniture and is able to be more competitive than XYZ Ltd. the latter having paid £140,248.23 for the same furniture - a difference of £9,014.63.