Suppose a USA company has a supplier located in Canada who does work for them. They receive a bill from the Canadian company each month for about $10,000 USD. Each bill includes a foreign exchange adjustment of several hundred USD. Does the USA company have foreign exchange exposure here? Should they be doing something about this? Thanks.
Sara
Where 'here' is the UK, right? If so, I think you aren't telling us something from your homework assignment because as you have told us the facts, the UK has nothing to do with your scenario.
It's NOT a homework assignment. I've met treasury folks from the USA and from the UK and I find the UK treasury folks to be very sharp. You do know what it means to ASSume, right?
Sara
Indeed I do which is why I clearly stated it was an assumption.
So, in what way does the US company have anything to do with the UK?
In message , snipped-for-privacy@hotmail.com writes
Yes.
Agree a new contract or get the supplier to invoice in Canadian dollars and buy the canadian dollars at a forward rate so that the amount payable in US$ is fixed at the outset.
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