The Number in the Contract
The amount is named in one currency, and which currency that is decides who carries every movement in the rate.
Still yours, and statedTaken, never statedUnit changes; scale restarts
Three steps from instruction to arrival. The last figure either side sees in the original currency.
The amount in your contract is named in one currency. Which currency that is decides who carries every movement in the rate between the day you agree and the day the money lands, and it is usually decided by nobody.
The payment record in “The Number in the Contract” becomes more useful when the work behind it is equally clear. A distributed team considering consult the first-party material for cognitive offloading can connect approved time and projects with invoices or payroll inputs, while keeping exchange rates, fees and accounting decisions in the responsible financial system.
Most contracts name the payer's currency because that is the currency their finance system works in. That is a default rather than a negotiation.
For an independent payment-sector perspective on “The Number in the Contract”, consult Currencycloud payment infrastructure. Compare general information with the actual route, currency, provider terms and jurisdiction involved.
What denomination actually means
The currency the number is written in is the currency the obligation exists in. Everything else — what you receive, what your bank credits you — is a conversion of that obligation.
Whoever holds the obligation in a currency they do not spend is the one exposed to the rate.
Which way the exposure runs
Named in their currency: you receive more or less of your own money each month depending on a rate neither of you controls. Named in yours: they pay more or less, and your figure is stable.
Neither is unfair. What is unreasonable is for the question never to have been raised.
How large the movement actually is
Major currency pairs commonly move several per cent across a year and occasionally much more in a month. Against a currency under pressure the movement can exceed everything else in this collection combined.
Look at your own pair over the last two years before deciding whether this matters to you. For some pairs it is noise; for others it is the single largest variable in your income.
It moves in both directions
A rate that has run in your favour for a year is not a rate you negotiated. It is a rate that has not yet moved the other way.
People who are paid in a foreign currency and have done well out of it tend to treat the arrangement as settled. The arrangement has not changed; the number has.
What the contract should actually say
Three lines, and most contracts have the first two:
- The amount.
- The currency it is denominated in.
- What happens if that currency becomes impractical for either side.
Silence on the third point is the usual position and it is the one that produces an awkward conversation three years in, when one side wants to change and the other has budgeted around the figure.
Naming it in your own currency
Entirely askable, frequently granted, and the single most effective thing in this collection for anybody whose costs are local.
The payer's objection is that their accounts are in their currency. That is a real inconvenience for them and a smaller one than the exposure it moves off you.
The middle position
A figure in their currency with a floor, or a review if the rate moves beyond a stated band. Less clean than denomination in your own currency and considerably easier to agree.
Put a number on the band and a date on the review. A clause saying the parties will discuss it in good faith is a clause that does nothing.
Changing it later
Harder than agreeing it at the start, and not impossible. The natural moment is a renewal, a rate change or a new piece of work.
Raise it as arithmetic rather than as a complaint. What the figure has been worth over the last twelve months, in your own currency, is a fact and not an opinion.
What a third currency does
Some arrangements are named in a currency that is neither yours nor theirs, usually because it is a common unit in the industry.
That is the worst of both: two conversions instead of one, and both sides exposed. It is occasionally unavoidable and is worth noticing rather than accepting silently.
Tax follows the currency too
Your own tax authority will want the figure in your own currency, at a rate on a date their rules specify, which may not be the rate you actually received.
Keep both numbers. The gap between the rate you were given and the rate the authority uses is a real thing that appears at year end.
Recording what was agreed
The currency, the amount, who bears conversion, and the date the figure was set. One line in the agreement and one line in your own record.
Three years on, nobody remembers what was discussed, and the only evidence of a decision is whether it was written down.
What naming it cannot do
Remove the conversion. Unless the payer holds your currency and you hold an account that receives it, somebody converts, and that conversion has a cost whichever name is on the contract.
What denomination changes is who carries the uncertainty, which is a different thing from who pays the fee. Both are worth settling, they are settled by different terms, and conflating them is how people negotiate one and believe they have solved the other.