Should I fix currency for a planned China order?
A currency forward can suit a firm foreign-currency order when the amount and payment timing are clear and you can fund settlement and any collateral demands. It is a binding currency commitment, so check delay and cancellation terms before booking. Start with the order currency and payment milestones agreed with Cambridge China Bridge.
Check whether you actually have currency exposure
Start with the currency you owe under the accepted quotation. If you pay an agreed sterling price, do not book foreign currency merely because the factory is in China. If you owe foreign currency, identify the unpaid amount and its payment trigger. Use safe supplier payments for the payment structure rather than changing that structure to fit a currency deal.
A forward is a legally binding agreement to exchange an agreed currency amount at an agreed price on a specified future date. Consider it for a firm commitment whose sterling cost matters to your budget. Be cautious where the quantity, specification or order approval is still unsettled. Fixing the currency does not fix freight, defects or other landed costs.
Separate the factory deposit from currency collateral
The factory deposit funds the goods order. A deposit requested by the currency provider serves a different purpose: ask whether it is collateral, advance payment for currency, or both. Get written confirmation of how it is held, when it is credited towards settlement and when any unused amount is returned.
Ask whether the provider can demand additional collateral before settlement. This is commonly called a margin call. Request its trigger, calculation method, notification route and payment deadline, plus the consequences of missing that deadline. A fixed exchange rate is not enough if meeting a collateral demand would leave you unable to pay the factory balance.
Match currency settlement to the payment trigger
Currency delivery means receiving the currency, not receiving the goods. Map the supplier deposit and balance separately, using the contractual payment triggers. A factory completion estimate, inspection appointment, shipping date and warehouse arrival are different events. Put the currency funding obligations alongside them in your order cash-flow calendar.
Ask the provider to explain fixed-date settlement and any available drawdown window. Confirm whether partial drawdowns, early delivery or extensions are permitted, how they are priced and what happens to unused currency at the end. Do not assume a flexible window is open-ended or that a factory delay automatically changes the currency settlement date.
Understand what cancellation could leave you owing
Treat the goods order and currency deal as separate commitments. Before booking, ask the provider to show what its terms require if the order is cancelled, reduced or delayed. A forward is binding; closing a position can involve a cost. Do not budget on the assumption that cancelling the goods releases the currency commitment or that losing the initial deposit is your maximum exposure.
Request the close-out calculation method, applicable fees, treatment of collateral and treatment of any gain or loss. Ask for a written worked explanation using an adverse market movement. Establish who can instruct a change and how acceptance is confirmed. For the goods side, separately read cancelling an order with a UK sourcing seller.
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Make the booking decision reviewable
Before accepting, keep the supplier quotation, payment milestones, currency quotation and provider terms together. Record the currencies, amount, sterling funding requirement, settlement date or window, collateral conditions and change or close-out terms. Compare providers on the same amount and timing, including their charges, rather than comparing a displayed rate alone.
Proceed only when the order is sufficiently firm and your cash plan can support both the goods payments and the provider's stated collateral conditions. If a delayed inspection, reduced order or collateral demand would break that plan, discuss a smaller commitment or waiting with your finance adviser and currency provider. Ask Cambridge China Bridge to confirm the order currency and payment milestones before you book.
Frequently asked questions
Do I need a currency forward for a sterling quote?
Start with the currency you actually owe. If the accepted quote is an agreed sterling price, do not book foreign currency solely because production is in China. Check any currency adjustment clause first.
Is the forward deposit the same as my factory deposit?
They serve different purposes. Ask the currency provider whether its deposit is collateral or advance payment, how it is credited at settlement and when unused funds are returned.
Can I get a margin call after fixing the exchange rate?
Ask whether your provider's terms allow additional collateral demands. Get the trigger, calculation, payment deadline and consequences of non-payment in writing before booking.
What happens to my forward if the China order is cancelled?
Do not assume the currency deal ends with the goods order. A forward is binding and closing a position can cost money. Ask for the close-out calculation and treatment of collateral, fees and any gain or loss.