Currency risk

[Old Greg]

I'm looking at opportunities to bring in some contractors from UK and sell them on in Ireland with a reasonable mark-up. The likelihood is that I would need to buy the services in GBP and sell in EUR. I can try to pass on the currency risk to contractors or client but that may not be a goer.

What are my other options to manage risk of currency fluctuation? Transfer a portion of cash reserve from EUR to GBP account up front? Are there any products out there that allow me to insure that anyone could recommend?

[WTFH]

I'm looking at opportunities to bring in some contractors from UK and sell them on in Ireland with a reasonable mark-up. The likelihood is that I would need to buy the services in GBP and sell in EUR. I can try to pass on the currency risk to contractors or client but that may not be a goer.

What are my other options to manage risk of currency fluctuation? Transfer a portion of cash reserve from EUR to GBP account up front? Are there any products out there that allow me to insure that anyone could recommend?

Why not buy the services in EUR, pass the risk on.

[dx4100]

If I was engaging a client in Ireland I would expect the currency to be Euros.

[Old Greg]

Why not buy the services in EUR, pass the risk on.

If I was engaging a client in Ireland I would expect the currency to be Euros.

Thanks for the views. I will give it a go, but I want to consider other options as well. One good thing is that nothing will be signed in advance of the referendum.

[eek]

If I was engaging a client in Ireland I would expect the currency to be Euros.

True, but a lot of contractors will probably go no thanks. To get the people you want you may need to pay in £....

[Old Greg]

True, but a lot of contractors will probably go no thanks. To get the people you want you may need to pay in £....

Exactly. And it's not that I have a role to fill that I can go out and advertise (or at least I don't want to). I have some people with very specific skills that I am looking to sell.

[eek]

My quick research shows that the few smaller advanced purchase foreign exchange companies went belly up when the market moved against them...

I think the best you can do is guess an appropriate exchange rate say 1.30euro and provide yourself with plenty of leeway...

[TestMangler]

You may not have the cashflow for this and the circumstances are slightly different as the events were one off rather than ongoing but I had a mate years ago who used to book and promote American blues acts for gigs in the UK and he would buy his dollars (to pay the acts) on the day the deals and contracts were confirmed. Sometimes he won from doing that and sometimes he lost, although I would guess you're not enough of a 'playa' to do that with long term contracts.

[diseasex]

What you can do is to hedge risk by buying options on currency for a small fee at the time of entering contract with them. I won't go into detail , but you can do this on interactive brokers platform

[eek]

You may not have the cashflow for this and the circumstances are slightly different as the events were one off rather than ongoing but I had a mate years ago who used to book and promote American blues acts for gigs in the UK and he would buy his dollars (to pay the acts) on the day the deals and contracts were confirmed. Sometimes he won from doing that and sometimes he lost, although I would guess you're not enough of a 'playa' to do that with long term contracts.

A lot of those providers went belly up in 2011. A lot of others closed once they discovered the true level of risk involved.