Reply to: Work in UK pay in Euros

[redgiant]

Thanks for all the responses.

Why not arrange an FX forward contract.

Agree a rate and there's no risk.

Forward Currency Contracts: Buy and Hedge your FX at the best exchange rates

It costs to do this unfortunately as BB has mentioned. If the contract was longer than six months I would consider it.

I always bill US clients in USD. You can factor in a margin for currency fluctuations if you want, but don't over-complicate things with triggers for different rates. As WiB notes, Cable has been in a tight range post crash, and it's unlikely to exit that range any time soon. I'd focus more on whether you're billing a sensible amount. There's a reason they're looking for YourCo rather than someone local, and US clients (in my experience) will generally pay more anyway (SMEs included).

I was told I was expensive by some agents here in the US for a similar role so I must be on a good rate. I have done work in the UK before with this SME clientco so they know I am worth it .... or so I hope so

You are a business. You can negotiate whatever makes sense to both parties. There is no "usual practice" to which you must conform, you and your client can determine which practice you want to use.

If you negotiate a currency conversion adjustment in the contract that benefits one side more than the other, expect that the other side will want something in return.

If the adjustment occurs symmetrically (up or down), then you can argue that it is neutral, but it really isn't. They might benefit, but they also might lose out badly. They are taking on the risk if they do this. A currency broker would let you lock in rates, but they would charge for it. So you can ask, but don't be surprised if your client says no or wants a concession elsewhere in return.

Cable rates are pretty stable. Unless you are setting up a long-term contract, I probably wouldn't bother. If you are looking at less than a year, the likelihood of drifting much more than 10% either way from today's rates isn't very high. That's not the case with other currency pairs, but with GBP/USD it is. The rates have gone up for a time to around 1.7 and down to near 1.45 or so, but for years it has been mostly sitting in the 1.55 to 1.60 range, right where it is today.

XE.com - GBP/USD Chart

I have noticed the pattern too however there has been news last week of the Fed buying gold to mitigate against inflation and the rising dollar. I suspect the change will be minor though as there is always mixed messages about interest rate increases. I don't think they will increase the rates at all until to later next year or even post the 2016 election.

Why the Fed is driving gold prices higher - MarketWatch

I'm going to go with the set $ per day rate for the duration of the contract and if there is a large change in the exchange rate during that time then then the client and I can discuss the day rate - no need to complicate things too much.

[BolshieBastard]

There is a cost in arranging a forward contract and locking in the exchange rate. I used to do this when I was importing cars from Europe when the euro used to move between 1.60 and 1.54! Now, those were the days!

[BlasterBates]

Why not arrange an FX forward contract.

Agree a rate and there's no risk.

Forward Currency Contracts: Buy and Hedge your FX at the best exchange rates

[jamesbrown]

And the client will complain if they have to pay more if the pound tanks against the dollar ... I'm just trying to mitigate both scenarios. If this isn't usual practice we will both have to accept the consequences for rate fluctuations.

The client is a SME so cash flow is more crucial to them than a large business so I am trying to help them out as well as me.

I always bill US clients in USD. You can factor in a margin for currency fluctuations if you want, but don't over-complicate things with triggers for different rates. As WiB notes, Cable has been in a tight range post crash, and it's unlikely to exit that range any time soon. I'd focus more on whether you're billing a sensible amount. There's a reason they're looking for YourCo rather than someone local, and US clients (in my experience) will generally pay more anyway (SMEs included).

[WordIsBond]

Resurrecting this thread.

I am about to go into a new contract that will pay in USD (the client will be doing the conversion from GBP into USD) as I am now based in the US. I have stated a rate x USD per day but if there is a large variation (say +/- 10%) in the exchange rate on either side can there be a clause in the contract that will allow for an adjustment to the day rate if this occurs so no side will loose out?

Thanks in advance.

You are a business. You can negotiate whatever makes sense to both parties. There is no "usual practice" to which you must conform, you and your client can determine which practice you want to use.

If you negotiate a currency conversion adjustment in the contract that benefits one side more than the other, expect that the other side will want something in return.

If the adjustment occurs symmetrically (up or down), then you can argue that it is neutral, but it really isn't. They might benefit, but they also might lose out badly. They are taking on the risk if they do this. A currency broker would let you lock in rates, but they would charge for it. So you can ask, but don't be surprised if your client says no or wants a concession elsewhere in return.

Cable rates are pretty stable. Unless you are setting up a long-term contract, I probably wouldn't bother. If you are looking at less than a year, the likelihood of drifting much more than 10% either way from today's rates isn't very high. That's not the case with other currency pairs, but with GBP/USD it is. The rates have gone up for a time to around 1.7 and down to near 1.45 or so, but for years it has been mostly sitting in the 1.55 to 1.60 range, right where it is today.

XE.com - GBP/USD Chart

[redgiant]

I can't see that working TBH. Exchange rates are your problem not the clients. Why should they pay more when it's going bad for you?

And the client will complain if they have to pay more if the pound tanks against the dollar ... I'm just trying to mitigate both scenarios. If this isn't usual practice we will both have to accept the consequences for rate fluctuations.

The client is a SME so cash flow is more crucial to them than a large business so I am trying to help them out as well as me.

[northernladuk]

I can't see that working TBH. Exchange rates are your problem not the clients. Why should they pay more when it's going bad for you?

[redgiant]

Resurrecting this thread.

I am about to go into a new contract that will pay in USD (the client will be doing the conversion from GBP into USD) as I am now based in the US. I have stated a rate x USD per day but if there is a large variation (say +/- 10%) in the exchange rate on either side can there be a clause in the contract that will allow for an adjustment to the day rate if this occurs so no side will loose out?

Thanks in advance.

[Contreras]

When this has been a concern for our contractors we have introduced them to an FX company who bung us a fat juicy commission.

FTFY

[Andy Hallett]

Whe this has been a concern for our contractors we have introduced them to an FX company who hedge / lock in a rate.

[BolshieBastard]

Anyone being paid in Euros needs to be wary. The currency is very volatile at the moment and while it may seem good, remember the value can god up as well as down.

Having said that, Im buy quite a few goods in Europe and saving pounds.

[jamesbrown]

That explains the "crap" conversion rate.

[SlipTheJab]

[kevpuk]

As others have said, rate change is your enemy....but, then again, the £ is strong against the EURO right now, and I suspect that it would not get significantly stronger, more likely to hold or even drop, meaning more £s in your pocket.
Still, that might be overly simplistic....

[TheFaQQer]

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