Currency solutions
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Transcript of Currency solutions
marchenkodanevych.com
Currency issues and how to deal with them.Possible solutions for foreign suppliers*
May 20, 2015
* Please note that this presentation is not a legal advice, but a general overview. Any particular situation shall be consider on a case by case basis.
Possible solutions
marchenkodanevych.com
Compensation to importer
Shift to local currency invoicing
Shift to local currency transactions
+ control over prices
Compensation to importer (1)
marchenkodanevych.com
Supplier
Distributor (Subsidiary) 1
Distributor (Subsidiary) 2
Retailers
InvoiceUSD 100*
USD 100*** (purchased for
UAH 3,000)
* currency rate at the date of invoice:UAH 20 per 1 USD
** currency rate at the date of payment from retailer:UAH 24 per 1 USD
*** currency rate at the date of payment from distributors:UAH 30 per 1 USD
Credit note forUSD 33
Payment ~60 days after invoice
UAH 2,000**+ mark up
Compensation to importer (2)
marchenkodanevych.com
• Relatively attractive to
distributors• In most cases it is
possible (and legal) to limit all distributors (on non-discriminatory basis) with mark-up level and to provide credit notes only after confirmation of relevant mark-up application
• No need to change format of invoicing and payments
• The currency deficit issue remains unsolved
• Retrospective discounts (credit notes) are under close focus of Antimonopoly Committee
Local currency invoicing (1)
marchenkodanevych.com
Supplier
Distributor (Subsidiary) 1
Distributor (Subsidiary) 2
Retailers
InvoiceUAH
2,000*
USD 66.6*** (purchased for
UAH 2,000)
* currency rate at the date of invoice:UAH 20 per 1 USD
** currency rate at the date of payment from retailer:UAH 24 per 1 USD
*** currency rate at the date of payment from distributors:UAH 30 per 1 USD
Payment ~60 days after invoice
UAH 2,000**+ mark up
marchenkodanevych.com
• Attractive for distributors• Usual currency of
payments• In most cases it is
possible (and legal) to limit all distributors (on non-discriminatory basis) with mark-up level
• The currency deficit issue remains unsolved
• Unusual format of invoicing
• No direct control over mark-up level
Local currency invoicing (1)
Local currency transactions (1)
marchenkodanevych.com
Supplier
Distributor (Subsidiary) 1
Distributor (Subsidiary) 2
Retailers
InvoiceUAH
2,000*
UAH 2,000**+ mark upUAH 2,000 ***
* currency rate at the date of invoice:UAH 20 per 1 USD
** currency rate at the date of payment from retailer:UAH 24 per 1 USD
*** currency rate at the date of payment from distributors:UAH 30 per 1 USD
Payment ~60 days after invoice
Local currency transactions (2)
marchenkodanevych.com
• Very attractive for
distributors• No issues with currency
deficit • Speeding up of all
payments• It is possible either to
exchange received UAH to another currency at receipt, or to transfer UAH to Ukraine (in case of established RepOffice here)
• Necessity to open UAH account abroad (not all banks do it, although some do, including Citibank, UBS etc.)
• Unusual format of invoicing and payments
• No direct control over mark-up level
marchenkodanevych.com
Have questions? Please contact:
Borys Danevychpartner, attorney-at-law4-B, Ivana Franka str, office 49Kyiv, UkraineTel: +380 44 220 [email protected]