# How Much Can the Euro Exchange Rate Impact my Revenue?

By

Seth Phillips | CEO | Bound

Let’s assume I’m a UK-based company and I report my financials in GBP.

I signed a contract in January 2023 with a German customer for EUR 300,000 over 24 months. At the time of contract signing, this was worth GBP 265,486.

• The purple line is the historic GBP/EUR exchange rate for 2022 and 2023.

• The neon line is a simulated randomly generated GBP/EUR exchange rate for 2024.

• The red stars are the days I get paid EUR 25,000 from my European customer.

## Example 1 - Revenue recognised at contract signing and customer payments are receivables

• From an accounting perspective I recognised EUR 300,000 (GBP 265,485) at contract signing.

• For the first months of 2023, I’m took small losses on the GBP/EUR rate, around GBP 100/month.

• By late 2023 and into simulated 2024, I’m taking GBP 1,000 to GBP 1,500 losses each month.

• Overall, I take a loss of GBP 20,101.56 over the course of the contract. That’s ~15% of the total contract value, assuming I convert all EUR receivables to GBP at time of receipt.

## Example 2 - Revenue recognised monthly when I get paid

• I estimated my contract value at GBP 265,485.

• I expected GBP 22,223.80 in revenue each month at the time of contract signing.

• For the first few months of 2023, I wasn’t far off projection with revenues of GBP 22,178.85, GBP 22,030.31 and GBP 22,007.33.

• By the later half or 2023 and into simulated 2024, my monthly revenues come in closer to GBP 20,700 to GBP 20,800 and I’m missing projections by nearly 15%.

## Summary

That’s an example of one contract. Now multiply that by the number of European customers you have. Numbers can get significant.

I don’t recall a single conversation with a customer when they told me that they actively tried to sign contracts in EUR, USD, JPY, etc. because they had a thoughtful view on strengthening exchange rates.

Most of our customers don’t want to take currency risk at all. They want to find the best customers and to hire the best talent around the world. Currency risk is just a necessary evil that comes along with international expansion.

But you don’t need to just be a helpless victim of exchange rates. You may not be able to control the global economy, but you can use currency hedging to make your finances more stable and predictable.

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All testimonials, reviews, opinions or case studies presented on our website may not be indicative of all customers. Results may vary and customers agree to proceed at their own risk.

Bound (Bound Rates Limited) is a limited company registered in England & Wales under number 13036275 with registered offices at 16 Great Chapel Street, London W1F 8FL

Bound Rates Limited (FRN 966723) is authorised and regulated by the Financial Conduct Authority to act as an Investment Firm.​

For clients based in the European Economic Area, payment services are provided by CurrencyCloud B.V.. Registered in the Netherlands No. 72186178. Registered Office: Nieuwezijds Voorburgwal 296 - 298, Mindspace Nieuwezijds Office 001 Amsterdam. CurrencyCloud B.V. is authorised by the DNB under the Wet op het financieel toezicht to carry out the business of an electronic-money institution (Relation Number: R142701).

For clients based in the United States, payment services for are provided by The Currency Cloud Inc. which operates in partnership with Community Federal Savings Bank (CFSB) to facilitate payments in all 50 states in the US. CFSB is registered with the Federal Deposit Insurance Corporation (FDIC Certificate# 57129). The Currency Cloud Inc is registered with FinCEN and authorised in 39 states to transmit money (MSB Registration Number: 31000206794359). Registered Office: 104 5th Avenue, 20th Floor, New York , NY 10011.

For clients based in the United Kingdom and rest of the world, payment services (Non MIFID related products) are provided by The Currency Cloud Limited. Registered in England and Wales No. 06323311. Registered Office: Stewardship Building 1st Floor, 12 Steward Street London E1 6FQ. The Currency Cloud Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 for the issuing of electronic money (FRN: 900199).

Currency hedging technology with unrivalled speed and flexibility

### Bound

Don't miss the latest

All testimonials, reviews, opinions or case studies presented on our website may not be indicative of all customers. Results may vary and customers agree to proceed at their own risk.

Bound (Bound Rates Limited) is a limited company registered in England & Wales under number 13036275 with registered offices at 16 Great Chapel Street, London W1F 8FL

Bound Rates Limited (FRN 966723) is authorised and regulated by the Financial Conduct Authority to act as an Investment Firm.​

For clients based in the European Economic Area, payment services are provided by CurrencyCloud B.V.. Registered in the Netherlands No. 72186178. Registered Office: Nieuwezijds Voorburgwal 296 - 298, Mindspace Nieuwezijds Office 001 Amsterdam. CurrencyCloud B.V. is authorised by the DNB under the Wet op het financieel toezicht to carry out the business of an electronic-money institution (Relation Number: R142701).

For clients based in the United States, payment services for are provided by The Currency Cloud Inc. which operates in partnership with Community Federal Savings Bank (CFSB) to facilitate payments in all 50 states in the US. CFSB is registered with the Federal Deposit Insurance Corporation (FDIC Certificate# 57129). The Currency Cloud Inc is registered with FinCEN and authorised in 39 states to transmit money (MSB Registration Number: 31000206794359). Registered Office: 104 5th Avenue, 20th Floor, New York , NY 10011.

For clients based in the United Kingdom and rest of the world, payment services (Non MIFID related products) are provided by The Currency Cloud Limited. Registered in England and Wales No. 06323311. Registered Office: Stewardship Building 1st Floor, 12 Steward Street London E1 6FQ. The Currency Cloud Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 for the issuing of electronic money (FRN: 900199).

Currency hedging technology with unrivalled speed and flexibility

### Bound

Don't miss the latest

All testimonials, reviews, opinions or case studies presented on our website may not be indicative of all customers. Results may vary and customers agree to proceed at their own risk.

Bound (Bound Rates Limited) is a limited company registered in England & Wales under number 13036275 with registered offices at 16 Great Chapel Street, London W1F 8FL

Bound Rates Limited (FRN 966723) is authorised and regulated by the Financial Conduct Authority to act as an Investment Firm.​

For clients based in the European Economic Area, payment services are provided by CurrencyCloud B.V.. Registered in the Netherlands No. 72186178. Registered Office: Nieuwezijds Voorburgwal 296 - 298, Mindspace Nieuwezijds Office 001 Amsterdam. CurrencyCloud B.V. is authorised by the DNB under the Wet op het financieel toezicht to carry out the business of an electronic-money institution (Relation Number: R142701).

For clients based in the United States, payment services for are provided by The Currency Cloud Inc. which operates in partnership with Community Federal Savings Bank (CFSB) to facilitate payments in all 50 states in the US. CFSB is registered with the Federal Deposit Insurance Corporation (FDIC Certificate# 57129). The Currency Cloud Inc is registered with FinCEN and authorised in 39 states to transmit money (MSB Registration Number: 31000206794359). Registered Office: 104 5th Avenue, 20th Floor, New York , NY 10011.

For clients based in the United Kingdom and rest of the world, payment services (Non MIFID related products) are provided by The Currency Cloud Limited. Registered in England and Wales No. 06323311. Registered Office: Stewardship Building 1st Floor, 12 Steward Street London E1 6FQ. The Currency Cloud Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 for the issuing of electronic money (FRN: 900199).