Currency risk (valutakursrisiko)
Also known as currency risk on receivables, fx risk, exchange rate exposure
Currency risk is the exposure that arises when a receivable is denominated in a currency other than your own — and it grows with every day the claim goes unpaid.
- Arises from
- Receivables in a foreign currency
- Grows with
- Payment time
- Reduced by
- Invoicing in your own currency
In practice
An invoice in euros or dollars keeps moving until it is paid, and it is the creditor who carries the movement. A customer who pays ninety days late has not only tied up your liquidity; he has also exposed you to three months of currency movement on the sum.
The link to payment time is what makes this a receivables question and not just a treasury one. The longer the DSO, the longer the exposure. It is the same day counted twice: once as tied-up capital and once as currency risk.
Managing it rarely happens in the collection stage. It happens in what was agreed: which currency you invoice in, whether an exchange-rate clause was agreed, and how much credit was given. Once the claim is overdue, the choice has been made.
Where it commonly goes wrong
- Stating the claim at the original rate. When collecting abroad it matters which day’s rate is applied, and that should be clear from the contract.
- Treating it as a treasury matter alone. The person who can shorten the exposure most is the one who sends the reminder on time.