For South African businesses of all sizes, winning a foreign client can be a major benefit. That’s especially true if the client is from the US, UK, or Europe, all of which have significantly stronger currencies than the rand. It’s also a model that a growing number of South African businesses are pursuing, with agencies, consultancies, tech companies, professional-services firms, and exporters leading the charge.
But as Future Forex CEO Harry Scherzer points out, many businesses with foreign clients don’t factor in currency fluctuations. As a result, they may not be doing enough to protect their margins.
“Given today’s levels of geopolitical uncertainty, the rand value of an international contract can change dramatically between signing, invoicing, and final payment,” says Scherzer. “That introduces uncertainty, and that’s something no business can live with for very long.”
“So much of business is about building and maintaining certainty,” he adds. “Without it, a business can’t properly gauge whether it can scale up hiring, equipment spend, and other forms of investment back into the business. That’s to say nothing of the salary increases workers are so desperate for.”
Avoiding uncertainty
The good news is that this uncertainty is manageable. With the right planning, businesses don’t have to treat currency volatility as an unavoidable cost of doing business internationally.
To illustrate how much currency fluctuations can impact a business’ revenue and margins, let’s consider a deal signed with a British company on the day the rand was at its weakest against the pound in the past 12 months. On 4 September 2025, one pound would buy R23.97. So, if the retainer was worth GBP10,000, you could reasonably expect a R239,700 revenue boost.
Assuming you began work immediately and the client paid 30 days after invoicing (meaning you got paid on 4 November when one pound would buy you R22.75), the R239,700 you were banking on is suddenly R227,500. That’s the equivalent of a junior to mid-level salary in many industries.
“Those kinds of dramatic shifts are why we advise clients that the foreign exchange risk starts when the contract is signed,” says Scherzer. “If you wait until the payment is eventually received, it’s too late.”
The same dynamic plays out whether a contract is priced in US dollars, euros, or another currency. Each has its own volatility drivers, so the size and timing of the swing will differ, but the underlying exposure is identical.
“It doesn’t matter if you’re invoicing in dollars, euros or pounds,” says Scherzer. “The specific instruments and timing you’d use to manage that exposure might differ slightly from currency to currency, but the principle stays the same: agree your terms and protect your margin before the ink dries.”
Mitigating risk
But what can businesses do to mitigate that risk?
“One of the most important steps a business can take is to agree invoice currency and payment terms upfront, rather than leaving foreign exchange decisions until later,” says Scherzer. “But there are other actions businesses can take too.”
These, he says, include setting a foreign currency exchange policy (what percentage of exposure must be hedged, which instruments are approved for use, who has authority to execute trades, and what rate thresholds trigger action) and using Forward Exchange Contracts (FECs) to lock in exchange rates for future transactions.
But it can also include natural hedging by holding foreign currency accounts. The business then has more control over when it converts foreign currency into rands, reducing its currency risk exposure. Additionally, businesses can build foreign currency exchange buffers into pricing contracts. This is typically done through a margin cushion, currency clauses (e.g. price adjustment triggers), or quoting in the business’s home currency where possible, further reducing risk.
“Choosing the right foreign currency exchange provider can also go a long way to protecting a business’ margins,” says Scherzer. “A good provider will not only offer services like FECs, but will also help businesses identify, understand, and manage foreign exchange exposure before it affects profitability. Crucially, it’ll also ensure you have full pricing transparency.”
Protecting margins
As the Future Forex CEO points out, the sooner businesses have those protections in place, the better. In fact, he believes it’s something organisations should look into before the contract is even signed.
“It’s much better to know that your margins are protected from the moment you sign the contract than to have to try and correct things down the line,” he says. “Protecting the value of a contract requires managing the currency risk from the outset. Those who don’t take that approach risk learning why they should the hard way.”
