Does Our Dollar’s Strength Make Your Business Weak?

The Canadian dollar has done some crazy things in my day. I did a search on the Bank of Canada website, to see the highs and lows against the US dollar over the course of my life. I found out something very interesting.

canadian_dollar_highs_lows

If you take a look at this, the high and low points of our dollar over the past 30+ years were both in this decade.

For some reason, as a bookkeeper, I’ve never worked for a client who exported product into the US. Most of them have had US vendors, so a strong Canadian dollar has always meant 1 of 2 things.

  1. Buy more product from the US vendors before they change their prices
  2. Pay off your $US accounts

I know from experience, when the dollar is fluctuating, it can make a huge impact in a very short period of time. Quite a few of the clients I’ve worked with bought their primary product through a US company. Let’s say they’re given Net 90 repayment terms with their vendor (not as common, but it happens on some big purchases). It’s happened that between the time they ordered the product, and when it came time to pay, the Canadian dollar made a 15% shift against the US dollar. Depending on the way it shifted, that company just paid 15% more or less for their main product. And, as anyone who’s worked in retail knows, it’s very difficult to pass that loss onto the customer by increasing your prices.

What about all of you?

I’d love to hear some of your experiences with the shifting dollar, especially if you do a lot of exporting to the US. I would love to find out how you dealt with the changes between 2002 and 2007. How did you handle it? Did the business survive? Let me know if the comments.