Hiring guide
A CFO quote in another currency: define conversion before approval
By CFO Index · Published
A CFO proposal says £3,000 per month while your budget is in euros. The comparison is incomplete until you know which amount is fixed, how an invoice in another currency is calculated and who bears conversion costs. Build a currency schedule before approval. This is an original procurement worksheet, not a prediction of exchange rates or a model contract clause.
Identify which currency fixes the obligation
Record the contract currency and amount separately from the invoice currency and the bank account used for payment. Ask whether a euro number on the proposal is a binding fee or an indicative translation of a sterling obligation. Include tax treatment for the responsible adviser to confirm. A bank payment in euros does not necessarily mean the supplier agreed a euro price. A fixed euro fee and a sterling fee converted each month are different commercial offers even if their first illustrative totals match.
Specify a reproducible conversion rule
Where conversion is required, agree the source, rate direction, observation date, timezone, non-publication-day fallback and rounding. Clarify whether the rule applies to the fee, reimbursed expenses or both. If the chosen source is unavailable, record the exception and obtain an approved alternative rather than selecting a favourable rate after seeing the bill. The ECB publishes euro-based reference rates for information and discourages transaction use; they are not executable bank quotes. Do not assume an ECB reference determines settlement or overrides a contract.
Compare the obligation under two invented rates
Hypothetical example: the contractual fee remains £3,000. Assume the parties explicitly choose a conversion convention quoted as pounds per euro. At an invented £0.85 per €1, the translated amount is £3,000 ÷ 0.85 = €3,529.41. At £0.80 per €1 it is €3,750.00, a €220.59 increase despite an unchanged sterling fee. These are synthetic inputs, not current ECB rates, suggested stress levels or actual provider prices. Multiplying £3,000 by 0.85 would reverse the intended conversion.
| Item | Rule or input | Result |
|---|---|---|
| Contractual monthly fee | Fixed £3,000 | Sterling obligation unchanged |
| First illustrative conversion | £0.85 per €1; divide sterling by rate | €3,529.41 |
| Alternative conversion | £0.80 per €1; same convention | €3,750.00 |
| Difference in euro translation | €3,750.00 less €3,529.41 | €220.59, not a sterling rate increase |
Give expenses their own currency boundary
Separate hypothetical reimbursement: an approved €120 travel receipt is recharged in sterling under an explicitly agreed £0.85 per €1 convention, giving £102. Confirm whether the actual receipt currency or card-settled amount is reimbursable and whether any markup is allowed. If the company paid the €120 directly, it should not also appear as a provider reimbursement. Keep the expense reference, approval and conversion calculation together; do not silently apply the fee's conversion date to every receipt unless the agreement says so.
Keep bank charges outside the reference translation
A receiving-bank deduction, sending fee or conversion spread can make the cash movement differ from the invoice. Identify who bears each charge and whether the beneficiary must receive the full invoiced amount. Use the actual authorised bank quote and settlement evidence for payment records. Do not invent a universal spread or gross up an invoice automatically. The accounting owner decides booking rates, tax documentation and exchange differences under the applicable rules; procurement comparison and accounting recognition are not the same calculation.
Test the first invoice before repeating the rule
Ask another owner to reconstruct one fee and one expense from their source documents. Compare contract amount, invoice conversion and settled cash without forcing them to be identical. Record any discrepancy with a commercial decision owner and effective date. Recheck when the billing currency or contract changes. A clear currency schedule makes quotes comparable; it does not remove exchange exposure or imply that a hedging product is needed.