A European customer asks for a price in euros, and you give one, because the alternative is losing the order to a competitor who will. Your costs are in yuan: materials, wages, the factory, the loan. Between the day the price becomes firm and the day the money is usable at home, the rate between the two currencies moves, and the direction is not yours to choose. The margin you calculated was a margin at a rate, on a day, and nothing in the offer said so.
Where does the rate actually move between a quote and a payment?
The exposure is not the market, it is the delay. Each stage of an export adds time between the moment the price stopped being negotiable and the moment the currency is converted, and the risk is little more than the length of that chain. Naming the stages turns an uneasy feeling into something you can act on, because each one can be shortened, documented, or moved onto somebody else.
- Between the quotation and the order. You hold a price you are bound by and no commitment in return. A validity period that runs long is the cheapest risk you will ever carry, and the easiest to remove.
- Between the order and the shipment. Production time, raw material purchasing, the queue at the port. The price is fixed, the costs are being incurred, and nothing in the contract reopens the price.
- Between the shipment and the payment. The credit period you granted, plus whatever lateness the customer adds to it. This is usually the longest stretch and the one most often forgotten, because by then the deal feels finished.
- Between the payment and the repatriation. The money has landed in euros and is not yet yuan at home. Conversion, bank review and the documents required for the transfer all take time, and the rate keeps moving throughout.
Who carries the risk when the invoice is in euros
Invoicing in your own currency does not make the risk disappear; it hands it to the customer. That is a legitimate answer and sometimes the right one, but understand what you are asking for. A European buyer handed a price in a currency they do not hold will either refuse, or add their own margin for the risk, or demand a discount worth more than the risk itself. A price in euros is frequently the reason you were shortlisted at all, and giving it up is a commercial decision dressed as a financial one.
What protects the margin, from the simplest to the most technical
- Invoice in your own currency. The risk moves to the buyer, and so does a part of the negotiation. Workable with a customer large enough to hedge routinely, or in a market where you sell something they cannot easily replace.
- Shorten the validity of the offer. Write the expiry of the price on the quotation itself and respect it. It costs nothing, it is ordinary practice everywhere, and it removes a whole stretch of exposure.
- Add a revision clause beyond a stated variation. The price is adjusted if the rate moves by more than an agreed amount, in either direction, measured against a named reference at a named moment. The symmetry is what makes a buyer accept it.
- Match costs to the currency of the revenue. Pay European costs out of euros: the warehouse, the service provider, the freight leg billed in euros, the compliance work, the salary of the person on site. Every euro spent in euros is a euro you never had to convert.
- Use a bank hedging instrument. A forward sale fixes the rate for a future date; an option buys the right to a rate against a premium paid upfront. Both require a bank relationship, a documented underlying transaction, and the discipline of matching the cover to the real flow.
A revision clause that names nothing is decoration. It has to say which rate is the reference, who observes it, on what day, and what follows — a price adjustment, a renegotiation, or a right to cancel. Without those, you have a sentence that gets argued about instead of applied. The same discipline applies to hedging: a forward sale that does not match the date the money actually arrives replaces one currency risk with another, because you will have to settle the contract whether or not the customer has paid.
Exchange control, and why repatriation needs matching documents
Receiving the money is not the end of the operation. Bringing export proceeds home assumes that the documents tell the same story at every point: the contract, the commercial invoice, the export declaration and the actual settlement. When they do not, it is the bank that stops, for its own regulatory reasons rather than out of any suspicion about your customer. The money sits somewhere identifiable and you cannot use it, which is worse than a late payment, because there is nobody to telephone and nothing to chase.
- An invoice amended after the declaration. A discount granted late, a quantity corrected on the quay, a sample added free of charge: the declared value and the settled amount no longer agree, and nothing in the file explains the gap.
- A payment from someone other than the buyer. A group treasury, an agent, a marketplace or a factoring company pays, and the payer named on the transfer is not the party named on the contract.
- Commissions netted off. The customer deducts an agency fee or a marketing contribution and transfers the balance. The settlement falls short of the invoice with no document saying why.
- Partial and split payments. A deposit, a balance, a retention over a quality dispute, each arriving separately and none of them matching a single declaration line.
- A consignee who is not the buyer. Goods delivered to a warehouse, a distributor or an importer of record while the invoice is addressed elsewhere, with nothing in the file connecting the two.
Decide the invoicing currency before you quote, not after the buyer reacts to the price. Put the expiry of the offer and the revision mechanism on the quotation itself, where they are read, and not in general conditions nobody opens. Then, before the goods leave, reconcile the contract, the invoice and the export declaration against one another — same parties, same amounts, same description — because the moment to fix a mismatch is while the documents are still in your hands.