Every Swiss business owner who sells abroad knows the feeling. You price a contract in euros or dollars, deliver the work, get paid, and the francs that land are fewer than you planned for.
The franc is one of the world's classic "safe-haven" currencies. When markets get nervous, money tends to flow into CHF, and the franc tends to strengthen. That's good for Swiss importers and travellers. It's a headwind for anyone with costs in francs and revenue in other currencies.
The most famous example: on 15 January 2015, the Swiss National Bank discontinued its minimum exchange rate of CHF 1.20 per euro, with immediate effect. The franc jumped sharply that day, and many Swiss exporters had to rethink their pricing.
You can't forecast the franc, and we won't try. But you can decide how exposed your company is. Here's a six-step plan that needs no forecast.
Where currency risk hides in a small company
Currency risk shows up in three places:
- Open invoices and contracts. You invoiced EUR 50,000 in March, payable in May. Until it's paid and converted, its CHF value moves.
- Balances you hold. USD or EUR sitting in an account is worth a different number of francs every day.
- Your competitiveness. Even if you invoice in CHF, a stronger franc makes your prices more expensive for foreign customers compared with competitors outside Switzerland.
Most SMEs only think about the first. The second and third are often bigger.
Step 1: Map your exposure on one page
Before any tools, get the picture. Take the next 12 months and list, for each currency:
- CHF: expected money in, expected money out, net.
- EUR: expected money in, expected money out, net.
- USD: expected money in, expected money out, net.
- GBP or other currencies: expected money in, expected money out, net.
Use last year's statements as a starting point. Many founders are surprised: a company that "sells in euros" may also pay a lot in euros (software, freelancers, suppliers, trade fairs) and have a much smaller net exposure than it thought.
What matters is the net. If you earn EUR 600,000 and spend EUR 450,000, your exposure is EUR 150,000, not EUR 600,000.
Step 2: Use natural hedges first
A natural hedge means matching the currencies you earn with the currencies you spend, so that a move in the exchange rate affects both sides and cancels out.
Practical ways to do it:
- Pay foreign costs from foreign revenue. If you earn EUR and pay German suppliers in EUR, keep a EUR balance and pay from it. Don't convert EUR to CHF and back again.
- Hold a balance in each currency you regularly earn and spend. One account per currency means fewer automatic conversions.
- Source in the currency you sell in, where it makes commercial sense. Some exporters deliberately buy materials or services in EUR to balance EUR sales.
Natural hedges cost nothing extra and don't need a forecast. They're the foundation.
Step 3: Decide your invoicing currency on purpose
Invoicing in the client's currency usually helps you get paid faster (see Get Paid Faster by EU and US Clients: Invoice in Their Currency), but it moves the currency risk to you. Invoicing in CHF moves the risk to the client, which some will accept and some won't.
Options to discuss with clients for longer contracts:
- Invoice in their currency, but keep payment terms short. Less time for the rate to move.
- A currency adjustment clause. For example, prices are reviewed if EUR/CHF moves more than an agreed percentage from a reference rate. Have it drafted properly.
- Shared risk. Split the effect of a move above an agreed band.
Step 4: Set simple conversion rules
Most FX losses at small companies aren't from the market. They're from converting at random moments, at rates nobody looked at. A written rule fixes that:
- "We convert on the 25th of each month, enough to cover next month's CHF costs."
- "We keep three months of EUR costs in EUR. Anything above that is converted."
- "Any single conversion above CHF 50,000 needs a second approval."
Then check what each conversion actually costs you. The spread on top of the market rate can be larger than the fee you see. See The FX Fee Your Bank Never Shows You.
Step 5: Know what financial hedges are (and aren't)
For larger, predictable exposures, companies use financial instruments:
- Forward contracts fix an exchange rate today for a conversion on a future date. You lose the upside if the rate moves in your favour, and you're committed even if the expected payment doesn't come.
- Options give the right, but not the obligation, to convert at a set rate, in exchange for a premium paid up front.
These can make sense for a known, large future flow, such as a big EUR contract over 12 months. They're less useful for small, irregular flows. They also usually require a credit line or collateral with the provider, and the pricing isn't always transparent. If you consider them, compare offers and get advice from someone who doesn't earn a commission on the answer.
Step 6: Book it consistently
If your books are in CHF, foreign-currency balances and open items are converted for your accounts, and your Treuhänder revalues them at year-end. (Swiss law also lets you keep your books in a foreign currency that's essential to the business, with CHF values shown in the financial statements; OR Art. 957a para. 4 and Art. 958d para. 3.) Agree once which rates you use and keep them consistent. Your The Month-End Pack Your Treuhänder Actually Wants should include every currency balance.
A worked example (hypothetical)
A Zug software company has CHF costs of about CHF 2.4 million a year and revenue of about EUR 1.8 million and USD 900,000. It also pays EUR 300,000 to contractors in Portugal and USD 250,000 for US cloud services.
- Net exposure: about EUR 1.5 million and USD 650,000, not the gross revenue numbers.
- Natural hedge: contractors are paid in EUR from EUR revenue, and cloud bills in USD from USD revenue.
- Rule: on the 25th of each month, convert enough EUR and USD to cover next month's CHF salaries and rent. Keep two months of EUR and USD costs in their own currencies.
- Big contract: a new three-year EUR deal is discussed with an adviser, who looks at whether a forward for part of the first year makes sense.
No forecast needed. Just fewer conversions, made on purpose.
Common mistakes
- Looking at gross revenue instead of net exposure.
- Converting everything on arrival and then buying the same currency back to pay suppliers.
- Trying to time the market. A rule beats a hunch.
- Ignoring the spread on each conversion.
- Signing long foreign-currency contracts with no adjustment clause.
Bottom line
The franc will do what the franc does. Map your net exposure, match currencies where you can, convert by rule, and use financial hedges only when the exposure is big and predictable enough to justify them.
FAQ
Why is the Swiss franc so strong?
It's widely seen as a safe-haven currency, so it tends to strengthen when global markets are uncertain. The SNB's monetary policy also plays a role. Nobody can reliably forecast it.
What is a natural hedge?
Matching the currencies you earn with the currencies you spend, so exchange-rate moves affect both sides and largely cancel out.
Should a small Swiss company use forward contracts?
Sometimes, for large and predictable future flows. For small, irregular flows, natural hedges and simple conversion rules are usually more practical. Get independent advice first.
Should I keep EUR and USD or convert to CHF?
A common approach is to keep enough of each currency to cover your costs in that currency and convert the rest by a written rule. The right split depends on your business and risk policy.
What happened to the franc in January 2015?
On 15 January 2015, the SNB discontinued its minimum exchange rate of CHF 1.20 per euro, and the franc strengthened sharply.
Hold the currencies you earn
With Firma, your company holds balances in USD, EUR, CHF, GBP, CAD, MXN and BRL in its own name. Pay foreign costs from foreign revenue, and convert on your own rule instead of on arrival. Money in is free. Every outgoing payment carries the plan fee (25 bps on Plus, 20 bps on Platform, custom on Enterprise), shown before you send. Conversions use the Reuters rate, and if an incoming payment is converted, there's no spread. Plus is Fr. 499 a month. Verification takes about two days, and if we can't verify your company, there's nothing to pay.
How much cash to keep in the first place? Read How Much Cash Should a Swiss SME Keep? A Simple CHF Buffer Plan. Doing business in dollars? See Doing Business in Dollars: How a Swiss Company Can Pay and Get Paid on US Rails, Not SWIFT.
This article is general information, not legal, tax, or investment advice. Talk to a qualified adviser about your situation.
Firma is not a bank and is not licensed by FINMA. Firma Operations AG is a member of VQF, a FINMA-recognised self-regulatory organisation for anti-money-laundering, and does not hold client funds. Fiat payments are processed through partner banks. Balances are digital stablecoin tokens, not bank deposits, and are not covered by esisuisse.
Sources: Swiss National Bank, discontinuation of the minimum exchange rate (15 Jan 2015); Swiss Code of Obligations, Art. 957a and 958d; Firma.
