Currency Hedging for Importers
Currency hedging for importers: stop a rate move eating the margin on goods you have already priced.
A forward fixes the sterling cost of a supplier invoice you pay weeks or months from now, so the margin you set when you priced the goods survives to the payment date.
You agree a supplier price in their currency, then set your own selling price in pounds. You pay the supplier later. In the gap between those two moments the rate can move, and it moves against a margin that is already fixed.
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Where an importer’s currency risk actually sits
You commit to a foreign cost and set your sterling price before you pay. A rate move in between lands on a margin that is already fixed.
An importer is a cash-out-before-cash-in business. You place the order in the supplier’s currency, you set your own price in pounds, and only then do you pay.
That order runs the other way for an exporter, who receives foreign currency rather than owing it, so the two exposures are not the same problem.
The definition of hedging, and the wider case for it, sits in our currency hedging guide. Here we cover the importer’s version: what a rate move does to a margin you have already committed, and what to do about it.
Margin erosion, in pounds
This is a calculation, not a sourced fact, and it uses one published worked figure. Take a supplier invoice of $100,000 due in three months. At 1.25 to the pound you budget it at £80,000.
If sterling weakens to 1.20 by the payment date, the same dollars cost £83,333. That is £3,333 you did not budget, purely from the rate, on a cost you had already priced into the goods.
The important distinction is that the rate only bites the part of the cost you actually pay in a foreign currency. Freight, UK duty and domestic handling are already in sterling and do not move.
Say the $100,000 is 70% of your landed cost. A 4% move against you is then closer to 2.8% of the landed cost, not 4%.
That still hurts. On a 12% gross margin, £3,333 is a large slice of the profit on the order, taken by the calendar rather than by anything you did wrong.
Why importers feel the timing more than most
Your working capital is already committed to the stock. The FX cost arrives on top, at the point when cash is tightest, before you have sold a single unit. That is why the same rate move that a cash-rich business shrugs off can strain an importer.
Locking a supplier payment with a forward contract
You agree today to buy the supplier’s currency at a fixed rate for the future payment date. An unknown cost becomes a known one.
A forward contract is an agreement between you and an FX provider to exchange currency at a rate set now, for a payment due later. It lets you lock the sterling cost of a supplier invoice months ahead. The full mechanics sit in our guide to how a forward contract works.
Two things worth understanding before you read a quote: the rate you are offered is not simply today’s spot, and the provider’s own margin is hidden inside it. They are separate, and it helps to see them apart.
Why your forward rate is not today’s spot
A forward rate is the spot rate adjusted for the interest-rate gap between the two currencies over the length of the contract. That adjustment is called the forward points, and it is arithmetic, not a fee.
Direction matters here. Sterling interest rates sit above the Swiss franc’s, so buying francs forward costs a pound buyer more than buying them today. The forward points move against you before any provider has touched the rate. We put that step in pounds in the worked example below.
The dealing margin is inside the rate, not on the invoice
Separate from the forward points, the provider adds its own dealing margin to the rate. That is how most of them are paid on a forward, and it rarely appears as a line you can see.
One published figure to anchor it: Revolut Business advertises a flat forward margin of 0.8% on major pairs such as euro, sterling and dollar, and 1.5% on other currencies. On a realistic franc invoice of about £237,600, 1.5% is roughly £3,560. Terms change, so confirm the figure directly.
Specialist brokers, by contrast, usually do not publish their forward dealing margin at all. They load it into the rate. So the point to hold on to is Ray’s, not a number: on a forward, ask for the margin in pounds, because most providers will not print it for you.
The part importers underestimate: the deposit, the credit line and the contract that binds
This is the detail providers explain late. For an importer who has already funded stock, it is a second call on the same cash.
Deposit or credit line: which one you are offered changes the cash flow
Without a facility, a UK broker commonly asks for an initial margin of 5% to 10% of the contract value. Revolut Business, for example, asks 5% on major pairs and 10% on other currencies. It is usually refundable, credited to settlement, not a fee.
On a £237,600 franc contract, a 10% deposit is about £23,760 of cash tied up until the goods are paid for. For a business that has already funded the stock, that is a second draw on the same working capital.
An established importer is routinely offered forwards on a credit facility instead, subject to a credit assessment, with a reduced or zero upfront deposit. That is the distinction that changes the decision.
A facility frees the £23,760, but it is credit, with its own terms, and it is not granted to everyone.
Window forwards: paying staged shipments without over-booking
Importers rarely pay one lump on one date. You pay a deposit, then balances as shipments arrive. A fixed-date forward does not match that.
A window forward, also called a flexible or open forward, fixes the rate now but lets you draw the currency down in tranches across a settlement window, as invoices fall due, instead of on a single day. It suits an importer whose shipment dates or volumes still move.
It does not soften the commitment. You are still bound to buy the full amount by the end of the window. It changes when you draw, not whether you must.
Margin calls: more cash, at short notice
Once the forward is booked, the provider marks it against the market. If the value moves against your position beyond a set trigger, it makes a margin call for more cash, usually within one business day.
Miss the call and the provider can close the position and invoice you for the loss. A credit facility can change how a call is handled, which is one more reason to ask about it before you book, not after.
Read this before you book
If the supplier order collapses, the forward does not.
A forward is an obligation to buy the currency, not an option to. If the order is cut, delayed or cancelled after you book, you are still committed. You have three ways out, and each has a cash consequence.
Over-hedge. You take delivery of currency you no longer need and carry the risk of selling it back at whatever the rate then is.
Roll. You extend the contract to a later date and pay fresh forward points to do it.
Close out. You settle the difference against the market. If the rate has moved against your locked position, that can cost real cash, on the same scale as a margin call. A window forward reduces this exposure but does not remove it.
A worked example: a UK importer paying a Swiss supplier
Spot to forward to margin, then the deposit and a possible call, every line a checkable number in pounds.
Worked example
Spot. At an illustrative 1.2625 francs to the pound, 300,000 CHF costs about £237,600 today.
Forward. Sterling rates sit above the franc’s, so buying francs forward costs a pound buyer more than buying them now.
At an illustrative forward near 1.2550, the same 300,000 CHF costs about £239,000. The forward points cost you roughly £1,400, before any margin.
Dealing margin. On top of that, the provider loads its own margin into the rate. Revolut Business advertises a flat 1.5% on a franc forward, about £3,560 here. Most brokers do not publish theirs, so ask in pounds.
Deposit. A 10% initial margin is about £23,760, held against settlement, not a fee. On a credit facility it may be reduced or waived.
Margin call. If sterling then strengthens 3% to about 1.3005, your locked rate looks expensive against the market, and the provider can call for about £6,940 more, measured on the pound contract value, within one business day.
Certainty cuts both ways
The forward did its job: it fixed the landed cost of the goods at a number you could price against. What it also did was demand cash the spot buyer never faced, roughly £1,400 in forward points and, on a 3% swing, about £6,940 more at a day’s notice.
We would check the live rate before booking, because spot moves daily.
When an option suits an importer better than a forward
A forward is an obligation with no premium. An option is a right, with one. The difference matters most when the deal might not happen.
A currency option gives you the right, but not the obligation, to buy the supplier’s currency at a set rate on or before a chosen date. It works like insurance: it caps your worst-case cost while leaving you free to walk away if the rate moves your way, or if the order falls through.
What the premium buys, and what it costs
That flexibility is not free. An option needs a non-refundable premium up front, commonly 1% to 3% of the amount. On a £237,600 franc payment, that is roughly £2,380 to £7,130 paid now, and it is the most you can lose on the option itself.
So the importer’s case is specific. When the order is committed, a forward is usually the cheaper way to fix the cost, because there is no premium to pay. When the deal may not happen at all, the premium buys you the right to walk away, which a forward, window or fixed-date, never gives you.
How much to hedge, and the levers that need no contract at all
A forward is one choice among several. An experienced dealer reaches for the cheaper levers first, then decides how much to cover.
Levers before a forward
- ◆Ask the supplier to invoice in sterling. This moves the FX risk to them, so you have nothing to hedge. The catch is that they usually price that risk in, at a rate you cannot see, so compare the sterling price against buying the currency yourself.
- ◆Price a buffer into your own selling price. If your margin already funds a small rate move, part of the exposure is covered before you buy anything. The trade-off is a slightly higher shelf price, which your market may or may not bear.
- ◆Net the payment against foreign receipts. If you also take money in that currency, match it against the supplier bill so you only hedge the gap. The offset is free where the flows genuinely line up, and it only stretches as far as those receipts.
How much of committed versus forecast spend to cover
Once you have shrunk the exposure, split what is left. Hedge committed, priced supplier orders in full, because the margin on them is already fixed and a rate move lands straight on it.
Cover only a portion of forecast orders whose volume or timing is still uncertain, so you are not committed to currency you may never need. Where timing is the uncertain part, the window forward covered above is the tool that fits.
Thin-margin importers hedge more, because a small rate move eats more of the profit. A business that can absorb a swing can afford to leave more open. We start from how committed and repeated your exposure is, then work back to a ratio that fits the cash flow.
Currency Expert’s view
For a committed supplier order on a thin margin, a forward usually earns its keep. The certainty it buys is worth more to an importer than the last fraction of a percent on the rate.
The thing to plan for is not the rate. It is the cash the forward asks for: the deposit or the facility terms, and a possible margin call if the market swings. Get those clear before you book, because that is where a simple hedge turns awkward.
The full mechanics, from deposit to settlement, sit in our guide to currency forward contracts.
Where the order book is still soft, look at the no-contract levers or a currency option before you commit to a full fixed-date forward. That is judgement, not fact, and it depends on how firm your orders really are.
The exposure calculations above are illustrative. The deposit, margin and premium figures are provider terms that change, so we would confirm them directly before booking.
Setting it up: what to check before you book
Verified 14 July 2026. Provider terms change; confirm each point directly before you commit.
- 01
Rate against the live mid-market. The dealing margin is inside the rate, so compare the quote with the interbank rate at the same moment.
- 02
Deposit percentage, or a credit facility. Ask which you are offered and, for a facility, what its terms and cost are.
- 03
The margin-call trigger. What move sets it off, and how fast you must meet it.
- 04
The dealing margin in pounds. Distinct from the forward points. If they will not state it, treat that as an answer.
- 05
Window forward with staged drawdown. Whether it is offered, and the length of the window.
- 06
If the order is cancelled or resized. The roll, close-out and resize terms, and what each costs.
- 07
Minimum contract size. Some providers will not book a small forward.
- 08
FCA authorisation and safeguarding. Safeguarded funds are not FSCS-protected. Check the exact legal entity.
Read this before you commit
Safeguarding is not the same as FSCS deposit protection.
Money held for a forward with an FX provider is generally safeguarded in segregated accounts under FCA rules, separate from the firm’s own funds. That is real protection, and different in kind from a bank deposit.
FSCS deposit protection, £120,000 per eligible business since 1 December 2025, covers deposits at a UK-authorised bank, building society or credit union. It does not directly cover funds held with an e-money institution or a payment institution, whatever the amount.
Tell us the supplier currency, the amount and when payment falls due.
We will compare live forward quotes in your supplier’s currency against the same mid-market rate, and introduce you to the providers that fit the payment and your cash flow. You decide whether to proceed, and deal directly with the provider.
Common questions
Does a weaker pound really raise my landed cost that much? +
Only on the part you pay in a foreign currency. On a $100,000 invoice budgeted at £80,000, a move from 1.25 to 1.20 adds £3,333. Freight, UK duty and domestic handling are already in sterling, so the hit to total landed cost is smaller than the headline move, but it still lands straight on margin.
What happens to my forward if the supplier changes the invoice amount? +
A resize is handled differently from a cancellation. If the invoice grows, you can top up with a further forward or draw more within a window.
If it shrinks, you are left holding currency you no longer need, and closing the surplus settles against the market, which can cost or credit you depending on where the rate has moved. We would ask the provider for its resize terms before booking.
Can I get a forward without paying a deposit up front? +
Sometimes. Without a facility, a UK broker commonly asks 5% to 10% of the contract value, about £23,760 on a £237,600 franc contract at 10%.
An established importer may instead be offered a credit facility that reduces or removes the upfront deposit, subject to a credit assessment. A facility is credit, with its own terms.
Can I just ask my supplier to invoice me in sterling? +
You can, and it moves the FX risk to them, so you have nothing to hedge. The catch is that suppliers usually price that risk into the sterling figure at a rate you cannot see. Compare their sterling price against the cost of buying the currency yourself before you accept it as the cheaper option.
Is hedging worth it for a small importer? +
It depends on how much of your margin a rate move would take. On a committed order with a thin margin, a forward buys certainty cheaply, and the deposit is cash returned at settlement rather than a fee.
If your foreign spend is small or one-off, the deposit and admin may outweigh the benefit, and a natural offset or a sterling invoice may serve you better.
For how we compare a provider’s rate and fee against the live mid-market, see how we compare providers.