Who Should Read This?
- UK-based businesses with regular overseas payments or FX exposure
- Importers/exporters planning ahead for seasonal stock or global supply chain costs
- Individuals purchasing property, paying tuition, or relocating abroad
- Anyone affected by currency volatility who wants price certainty in uncertain times
Why It’s Worth Reading
- Understand what forward contracts are and how they work
- Learn how to protect your budget against unpredictable currency swings
- Discover how Indigo FX helps simplify forward planning for global transactions
What You’ll Learn
- How forward contracts provide fixed exchange rates for future transfers
- Why they’re useful for budgeting, cash flow, and risk management
- Real-world examples of when to use them — and the benefits they offer
- How Indigo FX makes it easy to set up and manage a forward contract
Protecting Your Bottom Line: What Is a Forward Contract?
In today’s volatile foreign exchange markets, even small shifts in exchange rates can create big financial risks — whether you’re a business managing overseas invoices or an individual buying property abroad.
A forward contract is a simple, effective way to bring certainty to the equation. It allows you to lock in an exchange rate today for a payment you’ll make at a future date — from a week to up to 12 months ahead (sometimes longer). No matter how the market moves, you’ll get the agreed rate when it’s time to transfer.
It’s a smart way to remove guesswork and protect your margins — and with Indigo FX, it’s seamless and cost-effective.
Why Timing and Planning Matter
Let’s say you’re importing goods from Europe worth €100,000. At an exchange rate of £1 = €1.17, your cost is around £85,470. But if the pound weakens to £1 = €1.13 before your payment is due, your cost jumps to £88,500 — an increase of over £3,000 just because of market timing.
With a forward contract in place, you can lock in the original rate, budget confidently, and avoid unwanted surprises. This applies to individuals too: property purchases, school fees, relocation expenses — all of these can fluctuate drastically with market volatility.
Read our comprehensive guide on why exchange rate timing matters to find out more.
How Forward Contracts Work with Indigo FX
Setting up a forward contract with Indigo FX is straightforward and supported by a dedicated account manager who understands your needs.
Here’s how it works:
- Agree a Rate: We lock in a fixed exchange rate for the currency and amount you plan to transfer in future.
- Fix a Date or Window: Choose a specific date (or date range) for when you want to send the money.
- Place a Deposit: You typically pay a small upfront margin (around 5–10% of the total) to secure the contract.
- Transfer as Planned: On the agreed date, you complete the payment at the pre-agreed rate — regardless of where the market is.
For larger or ongoing commitments, we can even help structure flexible forward contracts or use drawdown facilities, allowing you to take partial amounts over time.
When Should You Use a Forward Contract?
Forward contracts are ideal when:
- You’ve agreed to pay an international invoice or supplier in a foreign currency
- You’re waiting to complete a property purchase abroad and don’t want rate risk
- You know you’ll need to send funds abroad at a future date and want price certainty
- You have predictable overseas payroll or tuition costs
In short — any time your future payment depends on a foreign exchange rate, a forward contract gives you control.
Why Choose Indigo FX for Forward Contracts?
At Indigo FX, we go beyond just offering great rates. We:
- Offer transparent pricing with no hidden fees
- Help you understand the market and assess timing
- Provide bespoke strategies tailored to your needs
- Offer quick setup and responsive support throughout the contract
With over £1 billion in international transfers since 2012 and a global reach across 60+ currencies and 150+ countries, we know how to deliver confidence in cross-border payments.
Final Thought
Currency markets can be unpredictable, but your business and personal finances don’t have to be. With a forward contract from Indigo FX, you get the tools to plan with precision, protect your budget, and remove the risk of costly surprises.
Thinking ahead? Let Indigo FX help you lock in peace of mind. Contact us today to discuss forward contracts tailored to your needs.