Quarterly Exchange | Corporate Profile | October 2018

Providing foreign currency exchange expertise to improve bottom lines and stress levels
When Paul Lennox left his job at Custom House Currency Exchange, in 2009, there was one thing he was sure of – he didn’t want to get involved in another start-up. His colleague Peter Gustavson, who had founded Custom House 17 years earlier, agreed. So did financial wiz Briony Bayer.

Their business had become a global player when it was acquired by Western Union. Gustavson was bound by a five-year non-compete clause, and Lennox and Bayer left after the sale, taking on other challenges.

But 2014, and the end of the non-compete, came much quicker than anyone had expected, and the three colleagues decided they would like to run a business together, again. But not a start-up, from scratch.

That mentality lasted about two weeks, says Paul Lennox. As they talked to former colleagues and clients, they heard, again and again, that there was a problem needing a solution – and that solution was, indeed, a new currency exchange company.
Says Lennox, “A week after we were saying, ‘There’s no way,’ we knew there was an incredible opportunity.”

Their intentions shifted, their vision was sparked, and within days, EncoreFX was born. Gustavson is founder and CEO; Lennox, who has been involved in the financial sector for more than 20 years, is President; Bayer is CFO.

the end of the non-compete, came much quicker than anyone had expected

With their wealth of experience and expertise, they hit the ground running, and growth has been dramatic. EncoreFX immediately began hiring, and launched six new offices “all at once”– in Vancouver, Edmonton, Calgary, Saskatoon, Winnipeg and Ottawa, in addition to their headquarters in Victoria. This wasn’t done on spec – from the moment EncoreFX was born, “people were eager to come on board; everybody was reaching out to us,” says Lennox.

That included customers – most of their clients are small to medium-sized businesses (SME’s) – and experienced colleagues, seeking to join the team they respected so highly. That meant they could place “a couple of key people” in every office.
And, it didn’t stop there. Soon, they were serving customers from a Toronto office as well, and most recently, they have launched their Waterloo Region office – which pleases Lennox no end, because although he’s now based in western Canada, he’s a KW boy, having grown up here.

The company also now has four offices in Australia and New Zealand.

... both Gramlow and Kulchyk have opted to live in Waterloo Region.

Waterloo’s EncoreFX is still a satellite of the Toronto (Mississauga) office, but the company’s local “key people” – Business Development Executive Allison Gramlow, and Risk Management specialist Steve Kulchyk – are committed to growing the business to where it is a stand-lone operation, with a larger staff. That, they believe, will happen within the year.
Their commitment to the Region is shown in their places of residence – both Gramlow and Kulchyk have opted to live in the Region.

Their prospects look good. EncoreFX has seen significant growth in four short years. The initial team of three colleagues has grown to include about 150 people. And there are plans to bring software development in house, as well as to look at business opportunities in other regions, so more growth – a lot more growth – is on the horizon.

That’s the snapshot of EncoreFX’s success story – but what does the company bring to the success of their clients?

EncoreFX focuses on SME’s because these companies have definite foreign exchange elements to their business, but they are not large enough to have their own internal treasury expertise.

Here’s the elevator pitch: “EncoreFX empowers businesses to make smarter financial decisions through access to premier foreign exchange transaction and risk management solutions.”

Their clients tend to be SME’s with significant foreign currency requirements, typically involved in a large amount of importing and exporting. But clients vary considerably, none the less, and Lennox says they work with companies that do $1 million in foreign exchange annually, right up to companies doing $100 million each year.

EncoreFX focuses on SME’s because these companies have definite foreign exchange elements to their business, but they are not large enough to have their own internal treasury expertise. Nonetheless, “foreign exchange is important to their business.”

As well, no two clients are alike – although Lennox points out that some of the larger foreign exchange companies may use cookie-cutter approaches – and so EncoreFX stresses individual, unique service for each client, developing risk mitigation and hedging strategies to optimize their foreign exchange interactions. Steve Kulchyk says, “We take the time to learn what their needs are.”

Allison Gramlow says that is one of the things she loves most about her work with EncoreFX is building relationships with clients. She says, “Clients like us because we’re a small business too. We’re like them, we have been where they’re coming from.”
So what’s in it for their clients?

First, of course, is the impact on the bottom line. Lennox says that EncoreFX clients will realize a two to three percent better exchange rate over time, and that goes right to the bottom line. That’s a very important gain, in companies “where business margins are fairly tight, and where the valuation of the Canadian dollar can make a difference.”

Typically, that doesn’t produce optimal results, either because they don’t actually have that specific expertise, or because “watching the market” takes up way too to much of their valuable time.

Bottom lines can be measured in a variety of ways. In some companies, even though three per cent dropping to the bottom line is a big plus, there are even bigger wins. Steve Kulchyk points out that “We save them time.” The reality is that, in many Canadian businesses with significant foreign transactions, it is the CEO or the CFO who are left with the responsibility for foreign exchange – an area in which they make not have the highest level of expertise, and certainly an area which takes up time they do not have, stealing them from other key responsibilities.
Lennox observes that “owner-operators are very entrepreneurial. They’ve had a lot of success building a business, and they think they can take the same approach to the currency market.”

Typically, that doesn’t produce optimal results, either because they don’t actually have that specific expertise, or because “watching the market” takes up way too to much of their valuable time.

Gramlow explains that EncoreFX’s team is the solution to that. They work with the client to develop the best foreign currency exchange program – and then EncoreFX functions essentially as the treasury department of the company, always communicating and always available. Kulchyk adds, “part of my job is to save them time. They are confident that I will keep them informed of what they need to know to make smart decisions.”

"Key to that are the company’s connections with three of the top 10 global foreign exchange banks – Goldman-Sachs, Deutsche Bank, and Citibank. Kulchyk notes that, for Canadian companies, these relationships are crucial, because there are no Canadian banks in the top 20 foreign exchange banks.

Today, the company has about 2,000 clients across Canada, with between 500 and 600 more through its offices in Australia and New Zealand.

Lennox notes that, “The US is sitting on the radar for next year.”

About 90% of EncoreFX's transactions are in the US dollar; European and Asian transactions make up the bulk of the rest. "We bring global banking relationships to our clients. "Key to that are the company’s connections with three of the top 10 global foreign exchange banks – Goldman-Sachs, Deutsche Bank, and Citibank. Kulchyk notes that, for Canadian companies, these relationships are crucial, because there are no Canadian banks in the top 20 foreign exchange banks. “Having the expertise to utilize what these banks have to offer, we are able to bring these top ten services to smaller Canadian companies.”

EncoreFX is even just a bit old-school. Lennox says, “We are old-school, in that we believe in bricks and mortar… while we were opening offices across Canada, our competitors were closing theirs and consolidating in Toronto. We have more offices in Canada than anyone!”

That, says Gramlow, is key to building the individual, personal relationships that she and her colleagues have with their clients. “We get to know our clients, and their communities, very well on the local level.”
Lennox adds, “We’re here to do this business differently.”



Suite 1009, 180 Northfield Drive Unit 4, Waterloo
Phone: 289.497.9300 ext. 1717
Mobile: 226.338.6593
Email:
agramlow@encorefx.com
www.encorefx.com

Publisher is Exchange Business Communication Inc.
No part of this article may be reproduced without written permission from the publisher or Onyx Energy.

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ISSN 0824-45
Copyright, 2018.



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