Denominating in Your Own Currency
Naming the amount in your currency moves the rate risk to the payer, and it is a question of asking.
Still yours, and statedTaken, never statedUnit changes; scale restarts
Three steps from instruction to arrival. One step carries no figure: the hatching marks where the money leaves and is not drawn to scale, because there is no figure to draw. Nothing here adds them up, since an amount you cannot see is not an amount you can subtract. The section that is about the near end, because the far end is not available.
Naming the amount in your own currency moves every subsequent rate movement off you and onto the payer. It is one sentence in a contract, it costs the payer very little, and almost nobody asks for it.
The practical point in “Denominating in Your Own Currency” is that a landed payment should be supported by a record somebody can explain. Used for step rate compensation, open this workforce resource can add transparent time and project context when collection is proportionate, people can correct mistakes and financial records remain separate.
Everything else in this last section is smaller than this.
Additional context relevant to “Denominating in Your Own Currency” is available through Financial Conduct Authority. A useful review distinguishes the sent amount, conversion, fees, settlement date and landed amount.
What changes
The obligation becomes a fixed number of your own currency. Whatever the rate does, you receive the same figure and the payer's cost varies instead.
Your income becomes plannable, which for anybody with local costs is the point.
Plannability is worth something distinct from the average amount. A figure that is known is easier to live on than a larger one that varies, and the two are frequently confused in these conversations.
What it does not change
The conversion still happens and still costs something. Somebody converts, there is a margin, and the margin is a separate question settled by separate terms.
Conflating the two is the commonest confusion here: denomination governs the rate risk, charges govern the fees.
Asking for both in one sentence is the efficient version, and it is the version most likely to be agreed in one reply.
Why payers resist
Their accounts are in their currency and a variable cost is awkward for budgeting. That is a real objection and a smaller one than the exposure it moves.
A company budgeting in one currency with suppliers in several already handles this constantly.
How to put it to them
That one side carries the movement either way, and a company with other foreign payments is better placed to absorb it than an individual whose rent is fixed.
Framed as who is better placed rather than who deserves it, this is agreed more often than not.
The moment to raise it
At the start, at a renewal, at a rate change, or after a large movement has made the point for you.
A twelve-month record showing what the figure was actually worth each month is the strongest possible supporting document.
How to write it
Two lines, and the second is the one people leave out:
- The amount, and the currency it is denominated in.
- A statement that any conversion costs are for the payer's account.
Without the second line you have moved the rate risk and left the fees where they were, which is half the job.
The partial version
A fixed figure in your currency with a cap on what it may cost the payer, or a shared band. Less clean and considerably easier to agree with a cautious payer.
Put numbers on it. A clause promising discussion is a clause that does nothing.
When they genuinely cannot
Small payers, individuals, and companies whose systems only support their own currency for outbound payments.
Where that is true, the fallback is a rate fixed at invoice date, which achieves most of the same thing from the other direction.
What it does to their payment
Their bank converts at their end, at their rate, and sends your currency. That is usually better for you anyway: the conversion happens at a point where somebody has an account relationship and a reason to care about the rate.
It also makes the arriving payment a simple credit at your end rather than something your own bank converts automatically.
Receiving a currency you hold
The arrangement works best where you actually hold an account in the currency named. Otherwise your own bank converts it back, which reintroduces exactly what you were trying to avoid.
Check that your account can receive it before asking for it.
Where it cannot, the account question comes first and the denomination question second. Asking in the wrong order produces a term that is agreed and then undone by your own bank.
Existing arrangements
Harder than a new one and far from impossible. Raise it with arithmetic rather than as a grievance, and ask once.
The natural moment is any conversation about the figure itself, where changing the currency and changing the number can be discussed together.
What this cannot do
Make you indifferent to exchange rates. A fixed figure in your own currency is only worth what your costs are, and if your costs are elsewhere you have simply moved which rate matters.
It also leaves the payer with a cost that may eventually become a conversation about the figure. Moving a risk is not the same as removing it from the relationship, and an arrangement that becomes expensive for the payer will be raised with you sooner or later.
Raising it before the payer does is the better position. An arrangement revisited by agreement survives; one revisited under pressure usually ends with somebody conceding more than they meant to.