Currency Management – a Key Challenge for Corporates

A survey published by Deloitte revealed managing risk from global currency fluctuations to be a key challenge for corporate treasurers.


Engaging Global Talent

Companies today are engaging contractors globally in a vastly different way.  The emergence of contractor talent platforms, has enabled virtual and remote utilization of talent anywhere in the world. While these platforms allow for the identification of the best suited contractors for the role, in many instances they do not deliver the full suite of services to ensure that the contractor is properly set up and registered to work compliantly within their home country.


Currency Management

One of the more complex aspects of engaging a global contractor workforce is how the contractors should be paid and in what currency.  In the 30 years CXC Global has been facilitating global contractor payments and managing compliance, we have seen a dramatic shift in:

  • how companies set pay rates
  • how companies manage foreign currencies globally and
  • the various mechanisms that make payment to the contractor

In the early years, contractors were paid via international bank wires, like Western Union payments, or through a local staffing company. As compliance within the global contractor workforce is taking a more precedent lately, companies and contractors globally are tending to set pay rates in local currency, not US dollars. Paying a contractor in their local currency, can help with the contractor’s personal retention, given that no bank fees or currency conversion fees are being subtracted from the contractor’s gross payment.

This has resulted in accounting departments within corporations having to decide whether to set up additional currency accounts within their own treasury or purchase foreign currencies on a Forex type marketplace. Accounting departments and corporations prefer to keep their treasury as simple as possible. Because of this many companies have come to CXC Global currency management of conversion and fluctuation to ensure that contractors get paid the same amount every month, which ultimately adds to ongoing talent satisfaction.

To respond to the market demand, CXC Global managing directors and regional financial controllers have built a robust currency management process. The process allows contractor pay rates to be set in their local home currency and company. The USA business is then invoiced for services provided globally, in US dollars.

Currency management requires constant scrutiny. CXC Global financial controllers watch and average the currencies to offer our clients and partners competitive currency exchange rates. This process can be even more challenging when the US dollar is strong compared to other currencies around the world.


Business Areas Affected

Engaging the global contract workforce has many challenges, with currency management at the forefront.  Below we’ve listed the business areas affected and some of the challenges faced when managing foreign currencies.


PO Management:

  • Fixed amount for period of time
  • Unable to fix in foreign currency due to fluctuations


  • Single currency
  • Foreign exchange necessary
  • Managing multi-currency
  • Translation issues


  • Maintaining balances in foreign currency
  • Having to re-value at end of month
  • Tax liabilities – forecasting challenges
  • International audits
  • Keeping it local in the US
  • Multi-currency accounts
  • Need for new bank accounts in foreign countries; can take months, huge admin hurdle

CXC provides ease of use, by invoicing locally in USD and paying the contractor in their local currency, thereby eliminating the need for the client to manage foreign currency.


  • Amounts listed in USD
  • Single currency
  • Paid in local currency
  • Invoiced in USD


Benefits of currency management

The biggest thing contractors want is consistency and by providing a local currency, we provide that consistency.  On the flip side, if contractors are being paid in a USD amount, they’ll be subject to bank fees and conversions, which will take away from their in-hand (that they agreed to with the client) amount.  By having a local currency, not only are the contractors compliant (regardless of whether they are employed or self-employed), they still have that currency to fall back on. It’s consistent with what they’re expecting.  It’s also consistent with what the client is expecting to pay the contractor, once the conversion is explained and understood, because that still does confuse some companies.

The biggest thing really is that consistency.  For argument’s sake, let’s say a contractor wants USD, thinking they’re getting a better rate.  However, there is a sudden fluctuation in the exchange rate. The contractor ends up with less than they expected. The contractor won’t be happy and will raise their concerns. They might ask “why am I getting a hundred dollars less than I was expecting?”   This can cause issues internally with the team and the end client and can create a snowball if it’s not consistent.

Currency management also provides more consistency with contract management. Otherwise, when fluctuations in exchange rates happen, not only will the contractor complain, but SOW’s have to be revised, with new quotes. This creates extra work for everyone, including the partner and end client.


Exchange Rates

The other important factor here is that when CXC sets a rate with the contractor, we also set the rate that the client gives us in USD.  We set the rate with the publicly viewable rate the date the contractor signs. This way both the contractor, end client and CXC can agree this was the exchange rate from USD to that local currency on that date.

We do that for a couple of reasons;

  1. The currencies move every day.
  2. Contractors around the world get paid on average once a month, not weekly or every other week.  Waiting until the contractor starts, rather than the date the contract was signed, with onboarding and background checks etc, can add further time, at which point things may have changed.  Always lock in the best rate at the publicly viewable rate for both the client, contractor and CXC, at the date that the contract was set.

The above gives insight into how it works for the contractor and how we’re helping the contractor.  With the world now talking about total talent engagement, the CXC way keeps the contractors happy. Contractors are receiving a fixed amount monthly, not subject to fluctuation and not subject to fees, so the contractor can properly budget and  understand what they’re going to earn for the lifetime of the project.  Expectations are managed from the start.


Simplifying the Accounting Process

When paying around the world, CXC simplifies the process for our clients by invoicing them only in USD and paying the contractor in the local currency, saving time and energy from an accounting perspective.

The lifecycle begins at the time when the companies engage and sign a contract.  Using a fixed contract enables the client PO to be set at a fixed rate.  This is particularly relevant when using a procurement system. It enables the client to work with their procurement.  A lot of accounting systems don’t work well with foreign currency procurement, so using a foreign currency \creates a lot of work arounds in order to create a PO in a foreign currency.

Therefore, they’re able to setup their PO and budget in USD, at least for a quarter, if not for the lifetime of the project, depending on what type of fixed rate they’re looking to set with CXC.  Currency rates can be fixed for longer periods if required.  Not only from an AP and Procurement side, but from an invoicing perspective, the client is dealing with their home currency.  It means they don’t have to setup multi-currency accounts, or have to engage with a foreign exchange service, to help them to buy and send foreign currencies.

If the client did decide to go with multi-currency payments and setting up bank accounts in other countries, they also have to deal with other languages. Dealing with CXC means they don’t have to do that.  Balances in a foreign currency don’t have to be kept and then revalued further down the track.  No foreign exchange gains or losses that can create fluctuations in accounting or budgeting.    Our clients only have to send currency within the US, therefore no tax liabilities in other countries, or international audits.  Setting up a foreign currency account in the US is no easy task. Owners of the business have to sign up and provide personal declarations. In some cases, you might be required to travel to the foreign country in order to complete the steps for setting up a foreign bank account.


CXC – Ease of Use

Most procurement departments require PO’s for a fixed amount, for a fixed amount of time, however you can’t fix a PO in foreign currencies due to fluctuations in rates.  With CXC everything is written into the contract or SOW (Statement of Work) in USD and in a single currency, identifying that the contractor is being paid in the local currency, while the invoices are occurring in USD.  CXC can set the exchange rate for as short as a quarter or as long as one year, depending on the duration of the project or how long the partner wants to lock the rate in for.

As HR looks for engagement, procurement wants fixed costs, accounting wants simplified processes.  By paying through CXC, we provide ongoing accounting simplification, fixed costs and contractor satisfaction.

It’s important for contractor longevity and matching a company’s total talent engagement perspective.

Contact us directly to find out more about our solutions for compliant global payments.


CXC is a global HR outsourcing organization with 30 years of experience in workforce management. Our innovative and cost-effective solutions help companies gain a competitive advantage by improving efficiency while reducing risks.

Contact CXC today to start enabling your future workforce.