Case: a Colombian company pays a German machinery supplier in euros
To pay a German supplier in euros from Colombia, a company has to settle three things at once: the payment schedule, the foreign exchange channeling and the EUR/COP risk. This illustrative case shows how.
Imported machinery can be paid in installments over months while the exchange rate moves. When the contract is in euros and the buyer earns pesos, each unpaid installment remains exposed to currency risk.
At Soulbit Academy we present this case as an illustrative, composite example, not a real customer. A neighboring case, a Colombian builder paying imported materials inside its construction schedule, deals with the cost of delay. Here the focus is different: how to structure the payment of a capital good in euros, from the deposit to the balance.
The case: a packaging maker buys a thermoforming line from a German manufacturer
The company is an illustrative Colombian packaging maker with 64 employees and annual sales of about 9 million dollars. It buys a German thermoforming line. Both companies are fictional and every figure is assumed.
The assumed contract is for 480,000 euros, delivered FCA at the manufacturer's warehouse in Hamburg (Incoterms 2020), with three payment milestones. At an illustrative rate of 4,600 pesos per euro, it is worth 2,208 million pesos.
Why does buying a machine in euros open a currency position for a Colombian company?
Buying a machine in euros opens a currency position because the company bills its customers in pesos and owes a fixed amount of euros for several months. Until it buys those euros, it is short euros: every rise in the currency raises the peso cost of what it has not yet paid.
How to pay a German supplier in euros from Colombia: deposit, balance and commissioning
Paying in euros from Colombia comes down to three tranches, deposit, balance and commissioning, that share risk between the parties and set the buyer's treasury calendar. The percentages in the illustrative case are: a 30% deposit when the order is confirmed, 60% against shipping documents and 10% after the machine is accepted in the plant. Table 1 summarizes them.
| Payment milestone (case assumptions) | Share and amount in euros | Timing | Effect on the buyer's risk |
|---|---|---|---|
| Deposit | 30%, 144,000 EUR | When the order is confirmed, month 0 | The supplier reserves production capacity; the buyer bears counterparty risk |
| Balance against documents | 60%, 288,000 EUR | Against the commercial invoice and transport document, month 5 | After loading onto the nominated vehicle, the buyer bears transit risk |
| Payment after commissioning | 10%, 48,000 EUR | After acceptance in the plant, month 7 | The buyer conditions this 10% on the performance test |
The deposit exposes the buyer to counterparty risk. A refund guarantee or verifiable production milestones can help. If the principal right is to receive the machine, the prepayment is non-monetary and is not retranslated at closing; a right to a fixed euro amount changes the analysis. See IFRIC 22 and our guide to advance payments abroad.
FCA in Hamburg: risk and the payment schedule
FCA (Free Carrier) transfers risk when the seller delivers to the buyer's nominated carrier. In this case, delivery occurs when the machine is loaded onto the collecting vehicle at the manufacturer's warehouse. The Colombian buyer arranges the main carriage and insurance. Under CIP, the seller arranges insurance, although risk still passes before destination. The ICC explains the FCA delivery point.
The point that confuses most people is this: an Incoterm does not regulate payment. It does not say whether the buyer pays upfront, against documents or on credit. To see how risk rules and payment timing fit together, read Soulbit Academy's guide to Incoterms 2020 and payment timing.
In this assumed sequence, delivery to the carrier precedes the transport document. When the 60% is released against that document, risk has already passed. The case assumes that the buyer purchased cargo insurance and reviewed the policy before paying; any claim depends on its terms.
Channeling and foreign exchange declaration: what Colombian rules require when paying an import
Paying for imported goods from Colombia requires foreign exchange market channeling. External Resolution 1 of 2018 sets the framework, and Circular DCIP-83 sets the procedures. The central bank archives the older DCIN-83 separately; the latest DCIP-83 amendment consulted by November 2026 is dated August 2026.
The company has two routes. The first is to pay through an authorized foreign exchange intermediary, which receives the pesos, buys the foreign currency and files the exchange declaration with the company. The second is to use a registered compensation account, which requires periodic reporting of the transactions to the Banco de la República. Both routes are detailed in the article on the foreign exchange regime for companies in Colombia.
Is the deposit on an import also an exchange transaction?
Yes. An advance payment for an import is still a transfer abroad for a purchase of goods and must be channeled and documented as such, even if the machine does not yet exist. The company in the case treats all three milestones with the same rigor: each transfer has its own exchange support, whatever its size or percentage.
The numbering and form of the declaration or report change with amendments to the circular. Check the current text on the Banco de la República website, or with the intermediary, before each transaction.
EUR/COP risk between deposit and balance: what leaving it uncovered can cost
Exchange rate risk in a euro contract is the gap between the budgeted rate and the rate paid at each milestone. In the illustrative case the deposit is paid on day zero at 4,600 pesos per euro and costs 662.4 million pesos. If the euro trades at 4,850 when the balance falls due, a 5.4% rise, the two open installments cost more.
The arithmetic is simple and every input is an assumption. The 288,000-euro balance goes from 1,324.8 to 1,396.8 million pesos, 72 million more. The 48,000-euro final installment goes from 220.8 to 232.8 million, 12 million more. In total, 84 million extra pesos with nothing changed in the contract.
Table 2 compares three ways to manage that position. None is right on its own; the choice depends on the company's cash flow and the cost of tying up liquidity.
| Strategy (illustrative case) | What the company does | Advantage | Limitation |
|---|---|---|---|
| Buy the euros at each milestone | Converts pesos to euros on the day of each payment | Does not tie up liquidity ahead of time | Exposed to 84 million pesos of variation in the case scenario |
| Buy the balance euros in advance | Converts at signing and holds the euros until month 5 | Fixes the peso cost of the 60% installment | Ties up liquidity; if the euro falls, the opportunity cost is the company's |
| Cover with a hedging instrument | Contracts a hedge with an authorized institution, such as a forward contract | Fixes the rate without moving cash today | Depends on the available credit line and terms set by the institution |
Currency hedging for companies examines these instruments. For EUR/COP budgeting, use a reference rate and compare each actual quote. Colombia's TRM is quoted in COP per US dollar; it is not an EUR/COP rate.
Import VAT, withholding and accounting: what is settled apart from the supplier payment
Paying the supplier and settling taxes are two separate flows. Customs duties are settled in the import declaration, and VAT is based on the customs value plus tariffs, according to DIAN doctrine on the taxable base in the import declaration. The rate and any exclusions for machinery depend on the tariff heading, so the customs broker confirms them.
The DIAN explained in 2026 that a sale completed abroad requiring importation does not produce Colombian-source income or income tax withholding on that sale. The result may differ if the sale is completed in Colombia or additional services are paid. The assumed contract therefore separates machinery and commissioning; a tax adviser must assess each component.
In accounting, a deposit that gives a right to the machine remains at its historical rate. The machine is recognized as property, plant and equipment with eligible import costs. The accountant must review the contract and each component.
What Soulbit does in a payment to a German supplier and what stays with the company
Soulbit V1 provides for fiat euro balances, a local Colombian banking rail for pesos and eOTC conversion by quote. It uses institutional MPC custody and human support. These capabilities describe preparing a balance; they do not by themselves establish an import payment route.
As a treasury hypothesis, the company could request conversion from pesos or stablecoins into euros before each milestone. The route for sending those euros to the German supplier must be confirmed with Soulbit and a foreign exchange adviser before it becomes part of this case's operating plan.
What Soulbit does not do matters just as much. It does not file the exchange declaration or decide whether a transaction is channeled through an intermediary or a compensation account. It does not handle the customs filing or settle import VAT. It does not offer forward currency hedging. And there is no fee or price advantage this article can attribute to it: the eOTC quote is obtained on request and each company compares it with its alternatives.
The company must also ensure that its route identifies the importer and supplies the required exchange data. The Banco de la República requires market channeling and leaves document responsibility with the company.
Three decisions from the case carry over to another company buying machinery in euros. The first is to separate the price of goods from the price of services in the contract, to know what may trigger withholding. The second is to set the currency policy before signing, not after the first payment. The third is to document every transfer as an exchange transaction from the deposit onward.
Frequently asked questions
Is this case a real company or a Soulbit customer?
No. It is an illustrative, composite case: the packaging maker and the German supplier do not exist, and the amounts, timelines and exchange rates are assumptions used to show orders of magnitude. No figure in the text is a Soulbit fee, price or result.
Can a Colombian company pay a German supplier in euros?
Yes, provided the import payment is channeled through the foreign exchange market, either through an authorized foreign exchange intermediary or a registered compensation account. The contract can be denominated in euros, but the payment remains an exchange transaction that is declared or reported depending on the mechanism used.
What exchange rate risk appears between the deposit and the balance of a euro import?
The risk is that the euro rises against the Colombian peso between the deposit date and the balance date, so the remaining installments cost more pesos than budgeted. In the illustrative case, a 5.4% rise in the euro adds 84 million pesos to the two installments that were still open.
Does the FCA Incoterm define when the machinery must be paid?
No. An Incoterm allocates costs, risk and delivery duties between buyer and seller, but it does not set the price or the payment schedule. The deposit, the balance against documents and the payment after commissioning are agreed separately in the contract's payment terms.
What does Soulbit do in a euro machinery payment and what stays with the company?
Soulbit V1 provides for fiat euro balances and eOTC conversion by quote; in Colombia it has a local banking rail for pesos. Before using it for an import payment, the company must confirm the route to the supplier and the required foreign exchange channeling. The declaration, customs, VAT and accounting remain its responsibility.
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