Reply to: Negotiating a rise - advice needed

[jezosaurus]

Normally, if you get paid in Euros, it's because the client is paying in Euros. Fine for those of us who live and pay taxes in the Eurozone.

The usual rule is try to keep the money in the currency where you spend most of it to minimise your exposure to the exchange rate risk.

IMHO, by taking a contract in Euros when you need GBP, you are taking the exchange risk - something all businesses do when they work with different currencies. If you were not prepared to take the risk, you should have negotiated to be paid in GBP at the start of the contract.

That doesn't mean to say you shouldn't be in line for a rate increase.

[psychocandy]

So you'd have been well happy if the exchange rate had of gone the other way before you started and the client \ agent said, sorry, due to exchange rate flucuations, we'll be paying you less in Euros now?

I suspect the answer is you'd have been on here complaining about measley client \ agents in those circumstances.

But, if you dont ask, you wont get. Plus, you've got to be prepared for the client to say ok but when the rate changes in our favour, your (Euro) rate's coming down.

That is, of course, up to them to negotiate.

[BolshieBastard]

Sorry I dont agree with this. Just because you agree a rate at the start doesnt mean you've got to take it for every single extension afterwards. Each extension is potentially another business negotiation.

Dont get me wrong, steaming in there with a huge request for a rate increase is going to need some justification. All I want is to be paid £x amount in sterling. Due to external influences I dont get that any more. Not my fault, or the clients, but ultimately not my problem either.

I just planned to explain it this way to agency/client pointing out that I'm not expecting more than when I started just the same.

But of course, at the end of the day it will come down to size of Kahunas. Will client be willing to stump up a few more euros or will they flatly refuse. Up to me then to walk or suck it up.

Next extension though I will be raising the issue. Whether I then have options nearer the renewal date will determine what I do. If I don't have any options and they refuse I'll probably have to suck it up. If I do, then I may walk away, and shake hands with the client.

Nothing wrong with this IMHO. After all, certainly better than clients who drop a rate cut half way through a contract, isn't it?

So you'd have been well happy if the exchange rate had of gone the other way before you started and the client \ agent said, sorry, due to exchange rate flucuations, we'll be paying you less in Euros now?

I suspect the answer is you'd have been on here complaining about measley client \ agents in those circumstances.

But, if you dont ask, you wont get. Plus, you've got to be prepared for the client to say ok but when the rate changes in our favour, your (Euro) rate's coming down.

[AnthonyQuinn]

Sorry I dont agree with this. Just because you agree a rate at the start doesnt mean you've got to take it for every single extension afterwards. Each extension is potentially another business negotiation.

you seem to be asking for advice on this forum but have made up your mind anyway. If you dont agree then why dont you go ahead with what you have decided. I would say its simple. 'You are asking for a raise at extension (Thats exactly what it is. Its not equivalent in £. The client doesnt care if you are paid in £ or $). You can say that you are asking for a raise because you have been adversely impacted by the exchange rate. The client might oblige or not. If they do, great. If they don't, the decision lies with you.

Good things is you might be able to ask politely. So a 'please' rather than an 'or else'. This will let you stand down with some dignity intact if they refuse. An 'or else' position means All or Nothing.

[TheFaQQer]

Well, to be honest, its not really a rise in real terms....

Client is a european company, and despite, agency being in the UK, I get paid in euros. I guess agency could pay me in sterling but I guess client insists on paying them in euros so they just pass it on to the poor contractors.

When I took the contract (almost a year ago, three extensions ago), it didnt seem much of an issue it being in euros (apart from a bit of hassle). I did manage to squeeze the agency for a bit 6 months ago but, obviously, the euro is bad news at the moment.

Rate was never the best but the decline of the euro has left me about £30 a day worse off. I'd imagine client wouldn't be too keen because they'd see it as an increase in rate (debatable because at the moment they're paying less in sterling) but all I want is the same in sterling as when I started.

Any suggestions? I guess bottom line is having the Kahunas big enough to walk away if needs be. How to approach with the agency?

Thing is I'm VERY busy at the moment, and I know no-ones irreplaceable but its a niche skill and client would be screwed I think. At the moment, they get loads of extras off me as well (taking the piss sometimes as well).

I want to stay. Its 20 mins from home and it looks like its a long termer but not so keen if my rate is going to erode much further.

You don't say when the next renewal / contract end is going to be.

Prepare your argument - I'd push to have the contract paid in GBP since that's where you are based and working through a UK company. As everyone else has said, you either walk or you don't if they don't want to pay more or change currency. If you have to go somewhere else, how confident are you of finding something which is going to be in the same rate region? If you have to spend £50 a day to stay away, then £30 a day to be at home is a much smarter option

If the contract was in GBP would you routinely be asking for an increase to cover inflation? How would you argue that? Essentially it is no different to the agency and / or client - your costs rising shouldn't necessarily become their problem, unless you are going to leave and they want / need you to stay.

My current client asked for a rate in EUR at the start, which I gave them. When the contract arrived, the rate was in GBP, but they hadn't converted it at all If you aren't happy with the rate, then find something better.

[psychocandy]

I had a contract with a UK company, in £. Come renewal time, with the pound having dropped in value, I said that I would need to increase the rate, as I couldn't cover my fx exposure any more. That is often seen as reasonable, as you are also in business to make money.

An alternative is renegotiate the contract into your home currency. You might have to take a further rate hit in order to get this, but then you pass the fx risk up the chain. Initially you'll be worse off, but if rates collapse further, you'll be better off than you would have been.

Spot on NAT. To be honest, the agency is UK and they obviously get paid in euros by the client so its all about them passing on the risk.

All up for discussion if you ask me like you said.

BTW - Did you get the rate rise or change of currency?

[NotAllThere]

I had a contract with a UK company, in £. Come renewal time, with the pound having dropped in value, I said that I would need to increase the rate, as I couldn't cover my fx exposure any more. That is often seen as reasonable, as you are also in business to make money.

An alternative is renegotiate the contract into your home currency. You might have to take a further rate hit in order to get this, but then you pass the fx risk up the chain. Initially you'll be worse off, but if rates collapse further, you'll be better off than you would have been.

[psychocandy]

Take it like a man! Seriously, I've been hammered over the years by the USD/GBP exchange rate. But I still enjoy my (quite easy) role so I let it pass. e.g. if I had to travel on the train each day to the smoke, it would cost me much much more than I've "lost".

And remember, rates can move the other way too. If you ask for a rise now, be prepared for a cut if rates move the other way.

Personally, if I whined to my client about exchange rate losses, I think they'd laugh in my face. And quite right too IMO. Isn't taking risks part of the new IBOYOA assessment?

Sorry I dont agree with this. Just because you agree a rate at the start doesnt mean you've got to take it for every single extension afterwards. Each extension is potentially another business negotiation.

Dont get me wrong, steaming in there with a huge request for a rate increase is going to need some justification. All I want is to be paid £x amount in sterling. Due to external influences I dont get that any more. Not my fault, or the clients, but ultimately not my problem either.

I just planned to explain it this way to agency/client pointing out that I'm not expecting more than when I started just the same.

But of course, at the end of the day it will come down to size of Kahunas. Will client be willing to stump up a few more euros or will they flatly refuse. Up to me then to walk or suck it up.

Next extension though I will be raising the issue. Whether I then have options nearer the renewal date will determine what I do. If I don't have any options and they refuse I'll probably have to suck it up. If I do, then I may walk away, and shake hands with the client.

Nothing wrong with this IMHO. After all, certainly better than clients who drop a rate cut half way through a contract, isn't it?

[psychocandy]

Such as how?

For example, if you were happy to contract at a particular rate then you try to buy an exchange rate option for a sum equivalent to the total fees at that rate. If the exchange rate moves against you, the option then has a value you can realise at the end of the contract to compensate you for the change in rate. If the rate stays the same or moves in your favour, the option expires without exercising it. This has a cost but is one of the ways a 'normal' company hedges its risks. Expert advice might help but .... sharks swim in those waters and an ignorant client (I consider myself ignorant in this area) can lose money with other financial instruments. The advantage of options (unless you write them) is that you can limit the downside to the cost of the option.

Might be worth looking into I guess.

[psychocandy]

When I've had contracts in Euros I have always worked them out on looking at the highest the pound has been against the Euro in the last 12 months before accepting them. (In other words I've turned some down.) If I can afford that then any extra when the exchange rate moves is a bonus.

BTW 20 minutes from home is a dream if you can't work at home most of the time.

To be honest, I did do that. But euro is at a 3 1/2 year low now :-(

[PSK]

Such as how?

For example, if you were happy to contract at a particular rate then you try to buy an exchange rate option for a sum equivalent to the total fees at that rate. If the exchange rate moves against you, the option then has a value you can realise at the end of the contract to compensate you for the change in rate. If the rate stays the same or moves in your favour, the option expires without exercising it. This has a cost but is one of the ways a 'normal' company hedges its risks. Expert advice might help but .... sharks swim in those waters and an ignorant client (I consider myself ignorant in this area) can lose money with other financial instruments. The advantage of options (unless you write them) is that you can limit the downside to the cost of the option.

[SueEllen]

Such as how?

When I've had contracts in Euros I have always worked them out on looking at the highest the pound has been against the Euro in the last 12 months before accepting them. (In other words I've turned some down.) If I can afford that then any extra when the exchange rate moves is a bonus.

BTW 20 minutes from home is a dream if you can't work at home most of the time.

[Platypus]

I want to stay. Its 20 mins from home and it looks like its a long termer

Worth £30 per day then, IMO.

but not so keen if my rate is going to erode much further.

Take it like a man! Seriously, I've been hammered over the years by the USD/GBP exchange rate. But I still enjoy my (quite easy) role so I let it pass. e.g. if I had to travel on the train each day to the smoke, it would cost me much much more than I've "lost".

And remember, rates can move the other way too. If you ask for a rise now, be prepared for a cut if rates move the other way.

Personally, if I whined to my client about exchange rate losses, I think they'd laugh in my face. And quite right too IMO. Isn't taking risks part of the new IBOYOA assessment?

[psychocandy]

If you do stay, you could look at the costs of hedging the currency risk and judge whether the benefits outweigh the costs?

Such as how?

[PSK]

If you do stay, you could look at the costs of hedging the currency risk and judge whether the benefits outweigh the costs?