Transcript for Episode 14 - Manage exchange rates
It’s important to understand how exchange rates can impact your business, particularly when considering how much to charge.
Exchange rates can change daily. You should keep a close eye on rates in your chosen market and research any factors that could influence them, to avoid losing money.
Consider your invoicing currency
You should think about whether you’ll charge for your goods or services in pounds or another currency agreed with your buyer. They will of course have an interest in this decision too, wanting the best deal for them. So be prepared to negotiate. Dollars and euros are common choices. Invoicing in pounds may be the option with least risk, but consider your buyer's situation.
Invoicing in a foreign currency
Sometimes invoicing in a buyer's currency could help you win orders. And in certain markets, it may be expected. So be prepared for your invoice value to rise or fall depending on the exchange rate.
Reducing risk
If you invoice in another currency there are things you can do to reduce risk. These could include agreeing to setting the exchange rate on the day of payment. Charging extra to cover the cost of the currency exchange. Getting paid into a foreign currency account. Negotiating payment terms over shorter periods, because the longer you wait for payment, the greater the risk of currency fluctuation.
Think about how pricing and its relationship to exchange rates may impact you in the longer term. If import prices rise in your target market and your business keeps its prices constant, that may help to grow your market share.
Remember you can speak to your bank or a specialist exchange rate service for tailored advice.
Exchange rates can change daily. You should keep a close eye on rates in your chosen market and research any factors that could influence them, to avoid losing money.
Consider your invoicing currency
You should think about whether you’ll charge for your goods or services in pounds or another currency agreed with your buyer. They will of course have an interest in this decision too, wanting the best deal for them. So be prepared to negotiate. Dollars and euros are common choices. Invoicing in pounds may be the option with least risk, but consider your buyer's situation.
Invoicing in a foreign currency
Sometimes invoicing in a buyer's currency could help you win orders. And in certain markets, it may be expected. So be prepared for your invoice value to rise or fall depending on the exchange rate.
Reducing risk
If you invoice in another currency there are things you can do to reduce risk. These could include agreeing to setting the exchange rate on the day of payment. Charging extra to cover the cost of the currency exchange. Getting paid into a foreign currency account. Negotiating payment terms over shorter periods, because the longer you wait for payment, the greater the risk of currency fluctuation.
Think about how pricing and its relationship to exchange rates may impact you in the longer term. If import prices rise in your target market and your business keeps its prices constant, that may help to grow your market share.
Remember you can speak to your bank or a specialist exchange rate service for tailored advice.
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