Which currency do you invoice your clients in?
Thread poster: Sarah Port

Sarah Port  Identity Verified
Local time: 20:43
German to English
+ ...
Feb 20, 2012

I have been wondering about this issue recently. At the moment I invoice all of my clients in their local currency but obviously this involves a certain amount of risk for me with regard to exchange rate fluctuations. So far it has always worked in my favour but this may not always be the case. I am wondering whether to invoice any new clients I acquire in future in my local currency instead and would be grateful if others would share their experiences in this regard.

 

Tomás Cano Binder, BA, CT  Identity Verified
Spain
Local time: 21:43
Member (2005)
English to Spanish
+ ...
In the customer's preferred currency Feb 21, 2012

In my case, so far it has been mostly euros in Europe and US$ in the rest of the world.

I think currencies are pretty stable in our world today, so any losses or gains due to exchange rates will be rather limited. If you ask me, you worry too much about it!icon_smile.gif


 

Sheila Wilson  Identity Verified
Spain
Local time: 20:43
Member (2007)
English
+ ...
It depends Feb 21, 2012

Tomás Cano Binder, CT wrote:
I think currencies are pretty stable in our world today

Oh dear, Tomás - did you have to say that?icon_smile.gif

I'll happily quote in any currency under the sun for a CV translation, as that's normally one-off, a small amount and financed by a private individual who needs more hand-holding. Besides, it's payment in advance so it arrives just after quoting. But when I start collaborating with an agency, it has to be on the basis of EUR, GBP or USD. Even then, I warn them in writing that I reserve the right to change my quoted rate in GBP or USD if the exchange rate differs a lot (either way - they could gain!). In my personal life, I buy goods from around the world on the internet - USD and/or EUR are often accepted but not always. If they aren't, I pay in their currency - it doesn't worry me unduly. I use PayPal and in the end it makes very little difference to me, just requiring a check on XE.com to see roughly how much I'll be paying.

I think you have to be totally selfish about it. If you refuse to accept USD, will it be likely to have a negative effect on your future income, or will it just put the occasional potential client off? What about the effect of refusing to accept a minor currency? Maybe there's good reason to accept a couple of the major currencies (EUR, USD in your case, perhaps?), but don't you have long-term problems dealing with everyone else's currencies? I can imagine you wouldn't normally lose/gain too much in the time between quoting for and receiving payment for a smallish job, but you're spending GBP and you can't go on indefinitely offering your services for a rate that bears no relation to your GBP rate, can you? Don't you have to alter your rate (in their currency) very frequently? Doesn't that put clients off as much as having to pay you in your own currency?

Sheila


 

Samuel Murray  Identity Verified
Netherlands
Local time: 21:43
Member (2006)
English to Afrikaans
+ ...
Whichever currency I quoted in Feb 21, 2012

Sarah Port wrote:
At the moment I invoice all of my clients in their local currency but obviously this involves a certain amount of risk for me with regard to exchange rate fluctuations.


I invoice in the currency that I quoted in. For EU clients, I quote in EUR, and for ZA clients I quote in ZAR, and for other countries I generally quote in USD. I also have a GBP rate for UK clients who don't want to pay in EUR, but I first quote in EUR for them as well. Sometimes a client wants to have a quote in his currency, and then I simply requote in his currency using that same day's exchange rate.

Yes, there is a risk that the exchange rate would turn against you. I disagree with Tomas that the currencies are stable -- they are sufficiently unpredictable that you can get burned if payment is late.


 

XXXphxxx  Identity Verified
United Kingdom
Local time: 20:43
Portuguese to English
+ ...
It depends on your bank(s) Feb 21, 2012

With the difficulty in opening bank accounts these days I find a lot is dictated by my banks and their various charges. I accept payments in EUR, GBP or USD. I have zero charges for receiving payments in EUR or GBP and transferring sums between the two does not cost the earth. However, my clients in the U.S. tend to like paying by cheque (which incurs fairly hefty bank charges my end) so I usually only accept large jobs when paid in USD. I haven't yet come across a U.S. client who has agreed to pay in Euros or Sterling so I'd have lost quite a bit of business over the years if I'd insisted on being paid in either of those currencies. Currency fluctuations are always a nagging concern when we see where sterling is against the euro compared to a few years ago. The future is pretty unclear so my somewhat vague policy at the moment is to go with the flowicon_smile.gif

 

José Henrique Lamensdorf  Identity Verified
Brazil
Local time: 16:43
English to Portuguese
+ ...
Stable??? Feb 21, 2012

Tomás Cano Binder, CT wrote:
I think currencies are pretty stable in our world today, so any losses or gains due to exchange rates will be rather limited. If you ask me, you worry too much about it!icon_smile.gif


It depends on where you are (i.e. your local currency), and the payment terms agreed with your clients, often involving your language pairs as well. As major peninsulas in Europe (Iberia and Italia) have grown used to much longer than normal payment terms, translators working with their respective languages should look for exchange rate variations on the long run.

A few decades ago, Brazil had a staggering 3-digit inflation. Money had to be used as soon as it was received, either to pay bills or to buy USD, otherwise it would be almost worthless a week or so later. Though this is now buried in the distant past, it left us with the most efficient banking system in the world.

Most of my rates in BRL have been kept unchanged since July 1994. Productivity gains from advances in IT have covered the low inflation ever since. As my working foreign language variant is EN-US, it makes sense to set my international rates in USD, rather than GBP or EUR.

Things were going OK until early 2009, when the USD plummeted from BRL 2.0 to 1.5. I kept thinking this would be temporary, so I maintained my int'l rates unchanged. The result was that every time I took a foreign job instead of a domestic one, I suffered some considerable loss.

Yet the 1.5 rate persisted, so by January 2010 I'd had enough, and raised my international rate in USD by 20%. It didn't cover all the gap, however it was the max that would keep me competitive.

For comparison purposes, I equate granting an extended payment term to translation clients, to borrowing money on overdraft to pay my bills. At that time, and still today, such interest rates in Brazil are close to 10% per month. As it was explained to me, the interest rate on overdraft is higher than regular fixed-term loans, because the bank doesn't know when they'll have that money back to invest elsewhere. Likewise we are often unsure when translation clients will actually pay; too many outsourcers tend to consider the agreed payment term as a mere time reference.

So I also decided to set my standard payment term as two weeks after delivery, only accepting jobs paying 30 days after delivery under low priority (i.e. not urgent)status. No more clients paying beyond 30 consecutive days after delivery.

These two decisions got me automatically rid of a bunch who wanted my translation services merely for financial purposes. The 'good' clients understood the situation immediately, and embarked on the new agreement. On the other hand, I gained several new clients who wanted my quality and reliability, being prepared to pay what it should reasonably cost. Instead of the expected decline in demand, I found myself serving a new breed of top-notch translation outsourcers, in addition to the previous ones that always were.

In Oct/Nov last year (2011), after the USD having remained stable at BRL 1.5 for so long, it spiked to BRL 1.8. Later I discovered the reason... multinational companies were withdrawing their profits (i.e. buying dollars) from Brazil to cover year-end budget gaps elsewhere, supposedly wherever there was a crisis in the local economy. The companies who were late in making such decision had to pay much more for the USD.

So I had an idea... I offered some of my clients to bill them in BRL, in exchange for COD payment. Of course, I still invoiced them in USD, however at discounted rates. Bottom line is they paid me 20% less in USD, and I received the very same amount in BRL, the currency I use to pay al my bills. The reason for COD was that I couldn't know when - and if - the USD would plunge back to BRL 1.5, otherwise I wouldn't be translating, but playing the currency exchange market instead. So many of my clients saved 20% on their costs with me by paying COD then, at the expense of multinational companies who were late in deciding to buy USD with their profits in Brazil. Now (Feb. 2012) the USD is back, almost down to USD 1.5 again. I fight for my clients whenever I can.


However sometimes they won't let me. Years ago, a client in the UK asked me about my rates. I gave them in USD, they immediately converted them into GBP, and froze them there. I did many jobs for them, and they were very happy with my work. However the economy took its turns, one day I did the math again, and realized that the USD/GBP exchange rate had changed significantly: I was getting 40% less from them in USD or BRL than we had agreed initially. No, they would not negotiate on rates, their payment term was somewhat longer than what I accepted at that time, and, in spite of their extensive and excellent BB rating, they consistently missed their own payment dates. So I dropped them. In spite of their persistent attempts to hire me again, I have denied service every time, until the day they are open to negotiate on rates and payment terms.


Therefore taking for granted that exchange rates are stable will work only if a translator caters mostly to their domestic market, and/or if the currencies in their served market(s) keep stable exchange rates on the long run indeed. Yet nobody should simply turn off the radar.

[Edited at 2012-02-21 10:46 GMT]


 

Alex Lago  Identity Verified
Spain
Local time: 21:43
Member (2009)
English to Spanish
+ ...
Customer preferred Feb 21, 2012

I use the one my customer asks for however if they don't ask for a currency I quote in euros.

Tomás Cano Binder, CT wrote:
I think currencies are pretty stable in our world today


We must live in parallel universes and are communicating via a "Proz space warp" cause at least in my world the € to $ is moving like crazy, just a few examples (based on the fact most of my agency clients pay me about 30 days after invoice):

29 aug 2011 1 € = 1.4487 $
29 sep 2011 1 € = 1.3615 $

16 jan 2012 1 € = 1.2669 $
20 feb 2012 1 € = 1.3266 $

So in the first case if I invoiced 1,000 dollars which was worth 690.27 € when I sent the invoice I actually received the equivalent of 734.48 € on the date the payment arrived, that's around 6.5% I made extra. In the second case I sent an invoice for 1,000 dollars worth 789.32 € and only received 753.80, so in this case I lost 4.5%.

If you compare the two ends (a six month period) and think that I send invoices to the same clients (so my rates haven't changed and the amount of work/time I need to produce 1,000 $ is the same) I have gone from being paid 690.27€ for my work to being paid 753.80€, that's a 9% gain, which is pretty nice (though it could easily have gone the other way and been a loss for all the control I have over this) but I think a 9% change over six months is not something you could call stable.


 

Tomás Cano Binder, BA, CT  Identity Verified
Spain
Local time: 21:43
Member (2005)
English to Spanish
+ ...
OK! Sorry folks! Feb 21, 2012

Alex Lago wrote:
Tomás Cano Binder, CT wrote:
I think currencies are pretty stable in our world today


We must live in parallel universes and are communicating via a "Proz space warp" cause at least in my world the € to $ is moving like crazy, just a few examples (based on the fact most of my agency clients pay me about 30 days after invoice):

29 aug 2011 1 € = 1.4487 $
29 sep 2011 1 € = 1.3615 $

16 jan 2012 1 € = 1.2669 $
20 feb 2012 1 € = 1.3266 $

Sorry folks. I might have oversimplified the matter and given a wrong impression. I haven't analysed things to such a level of detail, to be honest. Indeed the figures seem to prove that I am wrong!


 

Parrot  Identity Verified
Spain
Local time: 21:43
Member
Spanish to English
+ ...
A limited range of currencies Feb 22, 2012

Any currency that can be documented fairly for tax purposes theoretically fits the bill for me. As our tax administration accounts at the day's rate, the banks and their statements are a big help. But cases where there are hidden financial expenses DO pose a problem in squaring accounts - where the invoiced currency does not tally with the bank transfer, for example.

That said, I find myself invoicing largely in euro and dollars.

[Edited at 2012-02-22 09:24 GMT]


 


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