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Paid late in euros after invoicing in GBP and GBP has lost almost 1/2 of original value
Thread poster: laure claesen

laure claesen  Identity Verified
France
Local time: 08:56
Member (2005)
English to French
Nov 16, 2008

Hi my dear colleagues, I'm wondering whether you have any idea on how to deal with the following matter:

End of August, I received a job which the client (German) had accepted to pay in GBP. (800) ; The invoice was due end of September but they settled only on 24th October (received in my bank from Germany, so it must have been further delayed).

The problem is that they paid in EUROS and not in GBP, hence a big difference, which I calculated to be up to about 200 euros when I received the payment.

Since my acceptance of this job, as you may know, the Pound has got weaker and weaker against the Euro.

At today's date, with the pound being even lower agains the euro, the difference is only up to 136 euros.

Which means that the longer they delay their settlement of this difference, the lower what they owe me. And I suspect they are fully aware of this.

(I hope you follow me).

So my question is : on a legal basis, how should I estimate what they still owe me today ? Is the basis for settlement the value GBP had at the time of signature? Or today's date ? Or the date at which the invoice was due ?

I will read your comments with great interest.

Thanks!

ADLC


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Patricia Lane  Identity Verified
France
Local time: 08:56
French to English
+ ...
what does the signed PO say? Nov 16, 2008

Hi Laure,

If your contract/PO with your client stated clearly they were to pay you in GBP and you sent your invoice in GBP, then you have the basis to ask for payment of the remainder of your invoice.

Depending on your relationship with the client - and whether the payment in € was a paperwork error on their end - it may be a breeze or a struggle to obtain the balance due.

HTH,

Patricia


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Astrid Elke Witte  Identity Verified
Germany
Local time: 08:56
Member (2002)
German to English
+ ...
The amount due is what you invoiced them, in the currency you invoiced them Nov 16, 2008

It is not relevant how the amount invoiced relates to any other currency.

If the currency in which you invoiced the client was not convenient for you, for example because it is not the currency of your country, then you should not have agreed to invoice in that currency. You, the provider of the services, determine your sales regulations.

However, if the client paid you a different amount, or in a different currency, then you credit it to their account at its value in the currency invoiced as at the date of receipt, and send them a formal reminder for the amount that remains outstanding.

You determine the value of the partial payment here:

http://www.oanda.com/convert/classic?lang=fr

selecting the date on which you received it.

Astrid

[Edited at 2008-11-16 14:56 GMT]

[Edited at 2008-11-16 14:59 GMT]


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Jim Tucker  Identity Verified
United States
Hungarian to English
+ ...
No one knows this Nov 16, 2008



Which means that the longer they delay their settlement of this difference, the lower what they owe me. And I suspect they are fully aware of this.



The trend to date doesn't tell you anything about what is to come. If you (or they) really knew this, you could make millions in the currency markets.

I doubt this is on their mind. They are just late payers.


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Tom in London
United Kingdom
Local time: 07:56
Member (2008)
Italian to English
Calculating historic exchange rates Nov 16, 2008

lon a legal basis, how should I estimate what they still owe me today


laure,

Here's a very useful and comprehensive website on historic currency exchange rates.

Using this site it will be very easy for you to work out what you should have got, had they paid you on time.

http://www.oanda.com/convert/classic


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bohy  Identity Verified
France
Local time: 08:56
English to French
+ ...
Is there any law on this matter? Nov 16, 2008

Astrid Elke Johnson wrote:
The amount due is what you invoiced them, in the currency you invoiced them


Is it your personal conviction, or is there a law, regulation, or anything dealing with that ?
Personally, I would consider that the purchase order is what binds your customer.

Anyhow, either we are under-informed, or there is a complete lack of adequate laws (in various countries) on this issue.
For instance, I have dealed in the past, from my business in France, with an Irish-based company. I was expecting to make a deal in euros, but never managed to get anything else than a PO labeled in dollars (the end-customer was a US software company). I insisted to be paid in euros, at the exchange rate of the date where the PO was issued. It didn't work. They paid in dollars, and I also lost between 100 and 200 euros. Acting this way simply means that the translation agency puts all the monetary risk on the translators. Plus, I am not that sure that it is not a tax escape too.
I was not even able to figure out if dealing in euros is, or not, an obligation between companies of the Euro-zone?

However, Astrid, thank you for the advice about how to deal with that from an accounting point of view... Even if it doesn't work, sending reminders about outstanding amounts certainly outlines the problem.


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Richard Delaney FCIL CL
Germany
Local time: 08:56
German to English
It doesn't matter what they paid in Euros if the agreement was for payment in pounds. Nov 16, 2008

If you invoiced £800, then that is the amount they should pay.

If the pound is worth €1.50, then it means the customer will have to pay €1,200 in order to pay the agreed price; if the pound has dropped to €1.20, then the customer is lucky and will only have to pay €960 in order to pay you the £800. Nevertheless, this does not affect the amount of money that you should receive in pounds (if the agreement was indeed for payment in pounds).

How do you calculate what they owe you? Simple- you write: "they settled only on 24th October (received in my bank from Germany,...)". Your bank account will show, in pounds, how much you received. If you only received £650, then they will owe you £150. If you received £700, they will owe you £100.

You do not have to calculate the exchange rates, or indeed calculate how much they would have owed you in Euros at any given point in time- that is irrelevant. You agreed payment in pounds and therefore that is what needs to be provided.

However, you might also want to either charge them interest on the late sum (as an indication, the statutory interest rate awarded by courts in England and Wales is 8% although you may be able to charge a higher rate under the Late Payment of Commercial Debts Act http://www.statutelaw.gov.uk/content.aspx?LegType=All%20Legislation&title=commercial%20debts&searchEnacted=0&extentMatchOnly=0&confersPower=0&blanketAmendment=0&sortAlpha=0&TYPE=QS&PageNumber=1&NavFrom=0&parentActiveTextDocId=1455304&ActiveTextDocId=1455304&filesize=69198) or charge them a fixed late payment fee.


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Samuel Murray  Identity Verified
Netherlands
Local time: 08:56
Member (2006)
English to Afrikaans
+ ...
Yep, that's the risk you take Nov 16, 2008

laure claesen wrote:
End of August, I received a job which the client (German) had accepted to pay in GBP. (800) ; The invoice was due end of September but they settled only on 24th October (received in my bank from Germany, so it must have been further delayed). The problem is that they paid in EUROS and not in GBP, hence a big difference, which I calculated to be up to about 200 euros when I received the payment.


You're not making any sense, unless what you mean is this:

* You wanted GBP 800.00
* They wanted to pay in EUR
* In August, GBP 800 was EUR 1008
* You got paid in October
* In October, EUR 1008 is GBP 785
* You think you've lost GBP 25 because it took so long to be paid

So I don't know where you get the EUR 200 from... but in any case, if you accept a PO in a currency that is not your own, then that is the risk you take.

I had a case where the cheque from an American client got lost in the mail and had to be resent. By the time it arrived, the local currency had strengthened against the USD so much that I received half of the money I originally thought I'd get... but that was my risk, because I accepted the PO in USD.


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laure claesen  Identity Verified
France
Local time: 08:56
Member (2005)
English to French
TOPIC STARTER
Almost a maths game now: How much do you all think they owe me, guies? Nov 16, 2008

Thanks to all of you, there was much hard thinking put in my case and I find ProZ great for this.

I really feel grateful to Samuel and Richard for the pains taken to work out the actual sum owed .

So if get things right, I find that the calculation should be as follows :
Sum owed as of 16th August (invoice date) GBP 800 = EUR 1011.21
- Sum received (on 24th October irrelevant): EUR 800.00
Difference owed in Euros = 211.21

As Astrid and Richard suggest, no more conversion is then needed and the starting point for the exchange rates is the invoice date, nothing but that.

I can forget about the delayed payment, things being just a little too complex at that stage.

Please correct me if anybody disagrees.

And thanks again.
Ö Ö
w

ADLC


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Astrid Elke Witte  Identity Verified
Germany
Local time: 08:56
Member (2002)
German to English
+ ...
No, they don't owe you an amount in Euros Nov 16, 2008

You invoiced them in GBP, so they owe you the remainder of the GBP amount.

They paid you EUR 800.00, in other words GBP 632.78, on 24th October, so they now owe you another GBP 167.22.

Therefore you send them a reminder, writing on it: "Payment to account received on 24th October, 2008 GBP 632.78, amount still outstanding GBP 167.22. Please pay the amount outstanding within the next seven days."


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Samuel Murray  Identity Verified
Netherlands
Local time: 08:56
Member (2006)
English to Afrikaans
+ ...
Just an honest mistake? Nov 17, 2008

laure claesen wrote:
So if get things right, I find that the calculation should be as follows :
Sum owed as of 16th August (invoice date) GBP 800 = EUR 1011.21
- Sum received (on 24th October irrelevant): EUR 800.00
Difference owed in Euros = 211.21


Ever thought that this was not deliberate, but a simple mistake? If the client usually pays in EUR, his accountant may have misread your invoice in a hurry, not realising that it was for GBP 800 and not EUR 800. What did the client say when you told him about this situation?


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