A recruitment consultancy recently placed a candidate in a job in Switzerland, and was required to invoice their client in Swiss francs (CHF). The fee invoiced for the placement was CHF 25,000 and the consultancy was due to receive this fee within 90 days.

The client in Switzerland could have transferred the CHF directly into their sterling account here in the UK. However this would have not only left them exposed to any downturn in the rate during the ninety day period, but would also have left them at the mercy of the bank who would have exchanged the CHF at a rate of their choosing. The consultancy decided to take advantage of the services offered by Currency UK and booked a forward contract. They instructed their client in Switzerland to transfer the CHF directly to Currency UK’s Swiss franc account.

On 16 March 2005 they sold CHF 25,000 to Currency UK at a forward rate of 2.2200. The consultancy knew at this point they would receive £11,261.26 and could rest safe in the knowledge that they had no risk from currency fluctuations.

On 24 June Currency UK received the CHF 25,000 and advised them on receipt. The sum of £11,261.26 was transferred to the consultancy’s UK bank account that day. Now, the spot rate offered on the day was 2.3400. Simply by booking this forward contract the consultancy saved themselves £577.56.

In reality the consultancy saved considerably more than the above, as they would not have received as competitive a rate from their bank, nor would they have been able to fix this rate prior to receipt of funds. Over the course of the year, the recruitment consultancy was able to use Currency UK to make profits on all its foreign placements and correctly forecast the cash flow from these placements.