Slovak automotive suppliers: euro revenue, dollar and yuan inputs

A Trnava wiring harness maker supplies two car plants. Its prices are fixed in euros for each model year. Its copper, connectors and some electronic modules come from suppliers who invoice in dollars, and moulds from a toolmaker in Ningbo who invoices in yuan. When the dollar rose 8 percent against the euro over a few months, the margin on its biggest contract all but disappeared.

The structural mismatch

Slovakia produces more cars per person than any other country, and its suppliers work under the carmakers' terms: euro prices, annual reviews, strong pressure to cut costs each year. The inputs often come priced in other currencies:

• electronic components and modules, usually in dollars,
• some metals and plastics, priced off dollar commodity markets,
• tooling and parts from China, in dollars or yuan.

A year-long euro price against dollar costs means the supplier carries the exchange rate.

Match first

Do you have any dollar revenue? Some suppliers sell to plants outside the euro area, or to buyers who pay in dollars. That revenue can pay dollar suppliers directly.

If you do not, a dollar balance still helps. Instead of buying dollars at the bank's rate each time an invoice is due, buy dollars in planned amounts, when the rate is acceptable, and pay suppliers from the balance.

Price clauses and hedging

At contract renewal, raise currency adjustment. Some supply contracts include clauses that move prices when exchange rates leave a band. Carmakers resist them, but suppliers with a documented dollar cost base have a case.

For the rest, forwards fix a rate for known future dollar needs across the contract year. See FX forward contracts explained.

Yuan or dollars for Chinese suppliers

Chinese toolmakers and component makers often accept yuan and sometimes quote lower for it. Compare the yuan price with the dollar price after your conversion cost on both. Our guide on how to pay suppliers in China covers the details.

Controls

Supplier payment fraud targets companies like these: large regular payments to Asian accounts, often arranged by email. Confirm any change of bank details with a known contact by phone, and require two approvers for payments to new details.

Paying into Slovakia: the local rail

Source: European Payments Council: SEPA Instant Credit Transfer. Checked when this guide was last updated; the scheme's own page has the current figures.

Where Rivet fits

A Rivet business account gives a Slovak company US dollar details on every plan and euro details with an IBAN from the Growth plan, and on the Scale plan balances in 30 currencies, including yuan. Suppliers in 120+ countries can be paid from those balances, conversions happen at a rate shown before you confirm, and from Growth payouts can require a second approver. Rivet is not a bank; regulated partner institutions hold the funds.