Irish SMEs are under financial pressure like never before. Rising costs, squeezed margins and fluctuating demand have created a trading environment where even small shifts in exchange rates can erode hard-earned profit. For ISME members trading with UK, US or other overseas suppliers, the difference between a strong month and a loss-making one can often come down to timing a payment on the right day. That is not a reliable strategy.
The impact of Currency Volatility
Currency markets are influenced by various global factors, including economic policies, geopolitical events, and market sentiment.
For instance, within 24 hours of the Brexit vote, the pound dropped about 6.02% versus the euro, marking the sharpest single-day decline in the pair’s modern trading history.
In the past 12 months, currency volatility has been a significant issue for businesses trading overseas.
In 2025 alone, the EURUSD has moved from just above 1.02 in January, to close to 1.17 (end August), a move of 14%.
When an SME commits to a future supplier payment or expects to receive funds for an overseas sale, the final value in euro is uncertain. This uncertainty makes budgeting difficult and puts pressure on finance managers responsible for protecting margin.
What is a Forward Contract?
A Forward Contract is a tool designed to remove that uncertainty. It allows a business to lock in an agreed exchange rate today for a currency payment or receipt at a date in the future. Instead of hoping the market holds steady, the SME secures certainty in advance.
There are two main types used by growing Irish businesses:
• Fixed Forward Contract – The SME agrees a rate today and commits to exchanging a set amount on a specific future date. This suits confirmed payments like machinery imports or supplier invoices with a clear due date.
• Window Forward Contract – The business secures a rate but has flexibility to draw down the currency anytime within a defined time window, giving more control over cash flow.
Forward Contract in Action:
Your business imports components from the US every quarter. The supplier invoice is $80,000 payable in six months. If EUR/USD moves just 2% in the wrong direction, that small shift could wipe out margin on the entire shipment. By agreeing a Forward Contract, you lock in today’s rate, knowing exactly how many euro will be required. Budgeting becomes accurate, and profit is protected regardless of market swings.
The benefit is not about chasing the best rate. It is about certainty and control. When costs are predictable, pricing decisions become more confident, and cash flow planning becomes sharper. For many SMEs, that clarity is what separates growth from constant firefighting.
Are there disadvantages of A Forward Contract?
While Forward Contracts offer clear protection, they also require commitment. Once a rate is agreed, the business is tied to that rate for the duration of the contract. This removes uncertainty but also means the company will not benefit if the market later moves in its favour.
In other words, if the euro strengthens after you lock in your rate, you are still obligated to complete the contract at the original level. It is important for any business considering this approach to weigh the value of certainty against the possibility of missing out on a more favourable rate down the line.
How Fexco International Payments can help
Forward Contracts are already used by larger companies as part of standard treasury process. More ISME members are now adopting the same approach but in a way that suits the scale and cash cycle of smaller businesses.
If your business makes or receives regular international payments, it may be time to put structure around your currency risk rather than reacting month by month. Our team works with ISME members to assess exposure and put simple solutions in place that fit naturally into existing payment routines.
Take control of your FX costs before volatility takes control of your margin. Speak to us today on 1800 246 800 or visit the dedicated ISME member page at https://www.fexco.com/payments-and-fx/international-payments/isme/ and see how a Forward Contract can be tailored around your payment cycle.
