Passing cloud costs through to clients cleanly

Many IT services firms and managed service providers pay the cloud or subscription bill themselves and then re-bill the client, either as a straight pass-through or with a management markup. It is a common and useful arrangement. It also creates three operational headaches that quietly add cost and risk: the float you carry, the currency mismatch, and the difficulty of keeping pass-through spend separate from your own.

This guide is about those operational mechanics: timing, currency and separation. The related question of how pass-through costs are treated for VAT, as a disbursement or as an expense, is its own subject, and you will find a separate guide on that. Here the focus is keeping the money side clean.

The float you carry

When you pay the provider on their cycle and bill the client on yours, you are funding the gap in between. The provider takes payment now; the client pays you on your invoice terms, which might be thirty days later or more. For a single small subscription that is trivial. Across many clients and large cloud bills, the float becomes a real working-capital commitment.

That float is your money sitting in someone else's infrastructure until the client reimburses you. Managing it well means knowing, at any moment, how much you have advanced on each client's behalf and when it is due back. Without that visibility, pass-through spend can quietly tie up cash you needed elsewhere.

The currency mismatch

The major cloud platforms usually bill in US dollars. Your client may pay you in pounds, euros or another currency entirely. So you pay a USD cost, then bill a non-USD reimbursement, and the gap between the two exchange rates is yours to absorb or pass on. If you convert badly on the way out and the rate moves before the client pays, the pass-through can end up costing you more than you recover.

Holding the currency you pay in helps here. If you can settle the USD cost from a USD balance and bill the client in their own currency, you are not forced into a conversion on the provider's timetable. You decide when and whether to convert, which keeps the FX from eating into a margin that was meant to be neutral pass-through.

Keeping pass-through spend separate from your own

The third headache is commingling. If pass-through cloud spend runs through the same balance and the same cards as your own operating costs, reconciling what belongs to which client becomes a manual, error-prone exercise. Worse, it muddies your view of your own costs, because client infrastructure spend is mixed in with everything else.

The cleaner pattern is to isolate each client's pass-through spend in its own ring-fenced balance, with its own card for that engagement. Then what you advanced on a client's behalf, what you have recovered, and what is still outstanding are all visible per client, without untangling a shared statement. It also makes a management markup easy to apply and audit, because the underlying cost is cleanly attributed.

• Ring-fence each client's pass-through spend in a separate balance or pot.
• Issue a dedicated card per client engagement so charges attribute themselves.
• Hold USD to pay the USD cost and bill the client in their own currency.
• Track float per client so you know what is advanced and what is due back.

How Altery fits

Altery lets you create ring-fenced pots, or separate balances, so each client's pass-through spend sits on its own rather than mixing with your operating cash. You can issue a dedicated card per client engagement, so cloud and subscription charges attribute themselves to the right client instead of needing manual reconciliation later.

On currency, you can hold USD to settle the dollar-denominated cloud bill and bill the client in their own currency, converting on your own timeline rather than the provider's. Real-time balances per pot show how much you have advanced on each client's behalf and what is left, so the float never disappears from view.

Altery is not a bank. This is general information about managing pass-through spend, not financial, accounting or tax advice; for the VAT treatment of disbursements and expenses, see the related guide and take professional advice on your own position.

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