Overseas sub contractors: How do I manage foreign exchange?

[Dick Dastardly]

Hello. A quick question I need help with, if I may?

- I have a business that sells services to a large UK plc.
- The plc has operations in France and Germany and wants local suppliers in each region.
- The plc wants to use us as the lead supplier, subcontracting out to each local supplier.
- We bill the plc in £sterling and get paid 60 days later.
- The local suppliers have said they'll be invoicing us in Euros.

How best to manage the situation and not suffer from exchange rates?

Cheers,
DD

Edited by Dick Dastardly on Monday 4th September 11:45

[rdjohn]

I think that you need to negotiate a variable supply rate based on actual Euro/Sterling interbank exchange rate, currently €1:09.

The advantage for both you and your client is that you do not need to artificially boost your margin to cover the risk of fluctuation in prices, so it's a win-win.

I think that anything else is likely be costly.

[Noblebenn]

Call Chris Canning of Argentex. His field of expertise and fellow Pistonhead. He may be on here soon.