Many companies that import/export sell in euros and buy in dollars. They sleep soundly, which is precisely the problem. Currency risk does not announce itself: one day it shows up in the margin, without having been anticipated.
This article offers a method to spot it, quantify it, choose the appropriate response, and then implement it in Odoo.
1. A single rule to reason with
There is currency risk as soon as an invoice's currency differs from that of your cash, and a delay separates the invoice from payment.
The risk falls on whoever is not in the invoice's currency. This rule is enough to classify every situation.
| Situation | Risk for you | Note |
|---|---|---|
| You invoice a customer outside the eurozone in euros | None | The customer bears the currency risk. They may nevertheless renegotiate if their currency depreciates. |
| The customer requires invoicing in dollars | Yes | Exposure from invoice issuance to collection. |
| The supplier invoices in dollars | Yes | Exposure from order to payment, with an uncertain cost price. |
| The supplier invoices in euros | None |
In both at-risk cases, exposure opens at the order, not at the invoice. On a purchase delivered in 90 days, the cost price is already uncertain at the moment you set your selling price.
2. The special case of online sales
On an international online store, invoicing in dollars is often a commercial necessity: the American customer wants to read their price in their own currency. Yet they pay at the time of order. No delay separates the invoice from the collection, so the currency risk on the sale is zero. The dollar has no time to fluctuate.
Two caveats remain. The conversion carried out by the payment provider or the bank has a cost, to be compared across institutions. And purchases of goods in dollars remain exposed.
3. Quantifying the exposure: an example
You buy $100,000 of goods at a rate of 1.10, i.e. about €90,909. You resell them in euros with a 5% margin on cost, i.e. €95,454. Payment occurs 60 days later.
If the euro loses 5% and the rate moves to 1.045, your $100,000 costs you €95,694. With the selling price fixed, the margin disappears and the sale is made at a loss of about €240.
Rule of thumb: tolerable exposure should not exceed half of the margin. With a 5% margin, the acceptable currency variation is about 2.5%. Beyond that, you need to hedge the risk or change its nature.
4. Available strategies
Act on the invoicing currency
- Invoice in euros when the commercial balance of power allows it.
- Negotiate euro invoicing with the supplier if your revenue is also in euros.
- Publish a pricelist per currency, revised on a fixed schedule, rather than converting for every quotation.
Act on the contract
- Introduce a corridor clause: beyond a threshold (for example ±3%), the price is revised or the difference shared equally.
- Ask for a deposit at order and shorten payment terms. Every day shaved off reduces exposure.
Act on the flows
- Match dollar sales with dollar purchases. This is the natural hedge, the least costly solution: only the net balance remains exposed.
Use financial hedging
- The forward contract fixes the rate at the order, for a future payment.
- The currency option protects against a decline without giving up an increase, in exchange for a premium.
- Bpifrance's currency insurance is aimed at export contracts.
These instruments become relevant beyond a few tens of thousands of euros per settlement date, or on multi-year contracts.
5. Foreign currency account or currency purchase?
The two tools address different situations.
The foreign currency account is suitable when you receive and pay out in the same currency. The dollars received are used to pay American suppliers, without double conversion or double bank margin. You must still manage the balance: a dollar account left unmanaged becomes a currency position. A reserve of two to three months of disbursements is a reasonable order of magnitude, with the surplus converted.
Currency purchase is suitable when you have dollar expenses with no corresponding revenue:
- spot, if payment is near. Buying dollars three months in advance ties up cash and is already a bet;
- forward, for a significant one-off purchase. The rate is locked at the order with no immediate disbursement.
| Your situation | Appropriate response |
|---|---|
| Receivables and payables in dollars | Foreign currency account, with netting of flows |
| Payables in dollars only | Forward purchase, or spot if payment is near |
| Receivables in dollars only | Immediate conversion if the margin is comfortable, otherwise forward sale from the invoice |
| Low or irregular flows | Invoicing and purchasing in euros |
6. What Odoo enables
Odoo handles multi-currency very well. The configuration depends, however, on your flows, your currencies and your banks, and there is no single setup.
- Exchange rates: activation of the useful currencies and automatic rate updates.
- Purchasing: purchase order and vendor bill in the supplier's currency, converted at the rate of the day of each operation.
- Exchange differences: the difference between the rate on the invoice and the one at payment is automatically booked as exchange gains or losses.
- Sales: pricelists per currency, with fixed prices or automatic conversion, including for the online store.
- Bank: a currency journal for each foreign currency account you hold. This is not systematic.
- Closing: multi-currency revaluation (Enterprise version) recalculates foreign currency balances at the closing rate, with reversal at opening.
- Monitoring: the payment schedule of foreign currency vendor bills gives the open exposure at a given moment.
Odoo does not predict the dollar rate and does not replace your bank for hedging contracts. It does, however, tell you how much you have committed, in which currency and until what date. That is the condition for an informed decision.
7. Points to validate with your accountant
- Export of goods outside the European Union: VAT exemption upon proof of exit.
- Services invoiced to a company established outside France: VAT treatment and legal statement to include on the invoice.
- Realized exchange differences (accounts 666 and 766) and translation differences at closing (accounts 476 and 477).
- Provision for unrealized exchange loss, whose tax treatment differs from the accounting treatment.
- Mapping of the accounts used by the revaluation to your chart of accounts.
In summary
- Identify each foreign currency flow and the delay separating it from payment.
- Compare the exposure with half of your margin.
- Choose the least costly response: invoicing currency, clause, natural hedge, then financial hedging.
- Implement it in Odoo from the start of the project, not after the first exchange difference.
The dollar never warns before it moves. At ANOR, we help companies know, every morning, what it costs them.