Paying and Being Paid in a Foreign Currency: How to Safeguard Your Interests

foreign-currency

When you go on holiday, you shop around to make sure that you’re getting the best exchange rate you possibly can, but when this rate is poor, you simply don’t get as much for your money. It’s an unpleasant reality, and one that you do everything you can to lessen the effect of.

It’s the same when your work involves accepting or paying in foreign currencies. Fluctuations in value affect how much you will earn or pay someone else, and with the internet making global opportunities ever more accessible, more and more entrepreneurs are having to start considering this, and how to minimize its impact on their business…

Poor Exchange Rates Mean Pay Cuts and Paying More

Exchange rates often seem like little more than abstract figures, and when most of your suppliers and clients are based in the same country as you, you’ll probably pay scant attention to what the numbers are saying.

The change in attitude comes when people start trading abroad. Let us imagine that you either agree a day rate in another currency, or are charged such a rate by someone else. If sterling declines in value against the euro, as we know it has done recently, this would mean either being paid less or paying more, and that’s not good news for your business.

Indeed, over time it could add up to a significant sum, leaving you markedly out of pocket. Were the pound to decrease by five per cent against the euro over three months, you would either make five per cent less than you’d imagined, or end up paying five per cent more in real terms.

How to Address the Issue

There is nothing to say that currency fluctuations can’t work in your favour, but if the risk of them working against you is one that you’re not willing to run, you need to take matters into your own hands.

If you want the certainty of knowing how much you’ll earn for the duration of your contract, a foreign currency broker is one solution to your problems. Offering more competitive rates than most high street banks, as well as lower charges, they’ll allow you to fix a currency conversion rate for a set period of time.

A specialist company like Ebury is another option to consider. With global payment solutions to allow the efficient transfer of funds in other currencies, they charge great rates, and ensure that you know exactly how much you’re paying upfront.

See how much you could save by transforming your approach.

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.

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