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Question to translators in Canada about CAD/USD parity
Thread poster: ViktoriaG

ViktoriaG  Identity Verified
Canada
Local time: 19:38
English to French
+ ...
Sep 22, 2007

Dear fellow translators,

I am sure the fact didn't slip your attention: yesterday, the Canadian dollar reached parity with the US dollar, and for a brief moment even exceeded it.

I know of one excellent way to protect myself from losing too much money over this: charge in my own currency. Yesterday, some rather big Canadian companies who export to the US were saying that they have changed their price lists for US customers and these price lists now list prices in CAD instead of USD, specifically to save their companies from going bankrupt because of exchange rates. My question is this: have you used this method so far? When did you make the switch? How do clients in general react to this? I would also be pleased to see some arguments for and/or against this strategy.

In my case, I have lost just short of $4000 in revenues over the past year because of this (a year ago, 1 USD = 1.15 CAD, today 1 USD = 1 CAD - do the math!). Needless to say, it would be awfully nice if most of us started charging in CAD or raised our rates to reflect the changes (the latter being a dangerous tactic because if and when things switch back to "normal", the client could rightfully ask that you lower your rate again). I am wondering because many of us keep telling newbies about the eternal rate problem and things don't seem to follow through. If in the present case things went roughly the same way - then I know of a few thousands of people this side of the border who will have to revise their business practices, and who knows, even go looking for a day job...

*** EDIT: Underlying political reasons of the parity issue have been edited out as per Ralf Lemster's request. The part that was edited out of this post is to be replaced by the following: Is it just me, or does anybody else have a negative opinion about losing revenue to compensate for the economic troubles of a foreign country? ***

I am a pacifist, don't speculate and don't have a car...

[Edited at 2007-09-22 21:10]


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Suzette Martin-Johnson
Canada
Member (2007)
French to English
+ ...
loss of customers Sep 22, 2007

Hi Victoria

Well, I don't live in Canada although I am watching these currency developments with interest.

However, it would seem to me that you should be able to charge in your national or preferred currency.

I have charged customers in Europe in USD in the past and it has not been a problem. As a translator when you are making bids or setting prices you should be able to quote in the currency you want. Sadly, however, please be prepared to lose some of your less loyal customers!!

[Edited at 2007-09-22 01:34]


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The Misha
Local time: 19:38
Russian to English
+ ...
Just charge in your own currency Sep 22, 2007

Islander is right, and I don't see a problem here. Just quote in your own currency - or raise rates accordingly.

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Daniel Šebesta  Identity Verified
Czech Republic
Local time: 01:38
Member (2007)
English to Czech
+ ...
One preferred currency Sep 22, 2007

I don't live in Canada either but this is what I do: I have a preferred currency in which I normally charge. If the client wishes to have the invoice in a different currency, I convert the amount using the average exchange rate on the date of invoice. (Usually, we agree on a bank in advance whose exchange rate we will use.)

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Jan Willem van Dormolen  Identity Verified
Netherlands
Local time: 01:38
English to Dutch
+ ...
Not just Canada... Sep 22, 2007

The drop of the USD is not only a problem for Canadians - the Euro has risen to $1.40 in the past months, where it used to be at parity, once upon a time.
That means my US clients are paying me less and less, and I do start to feel concerned about this. $0.09 per word used to be reasonable a year ago (about EUR 0.08), but now it's getting really underpaid. But I do not have an answer yet - I'm a bit hesitant to start a discussion with them, as I am afraid I'll loose them.


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Nicole Schnell  Identity Verified
United States
Local time: 16:38
English to German
+ ...
Sep 22, 2007



[Edited at 2007-09-23 08:00]


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Louise Dupont  Identity Verified
Canada
Local time: 19:38
English to French
No perfect solution... Sep 22, 2007

Asking US clients to pay in CAD would cause hassle.
I think that we would lose some of them...
Asking for higher rates would also give the same result...

How much would be too much for them. This is what we have to know before we ask for a raise.


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ViktoriaG  Identity Verified
Canada
Local time: 19:38
English to French
+ ...
TOPIC STARTER
Not really... Sep 22, 2007

Nicole Schnell wrote:

Aren't we getting a little bit political here?




I was just asking if other Canadian freelancers with clients in the US agreed that it makes no sense to lose substantial amounts of money because of external factors to which one doesn't contribute, and which to boot one will not get any advantage from - it comes down to a donation, basically. Donations don't make much business sense to me - how about you? If I had to sacrifice part of my revenue to help improve the health system in my country or province, to help people without access to drinking water get a source of drinking water or help people in a country afflicted by war to get to a safe place, I would be more than willing to contribute and I do. But I am sure I would under no circumstances sacrifice a substantial amount of my revenue to support things going on in another country that I don't have a say in, for which I am not the least responsible and that will not be profitable for me, or anybody else for that matter. It's a shame I have now less resources to dedicate to causes that I can positively impact and even less money to dedicate to my own life and future. I just wanted to know if anybody agreed with me, and if not, what other views fellow freelancers have on the issue.

Let's face it, the whole parity issue was brought on by political factors. I don't really care about the reasons behind the issue, my preoccupation is with the issue, here and now. I, as well as tens of thousands of freelancers, need to deal with this. If you are not getting political about this, it is because you are on the other side of the border, and as expressed by another of your posts in another recent thread, this is an advantageous situation for you, and to most of our fellow US freelancers. But just suppose it happened the other way around and you would be the one negatively affected by this - would you exclude the bare facts from your reasoning?

That money was retirement money. I just really, really feel it went to the wrong place...

So no, I am not getting political. I am asking if anybody else agrees and I am trying to find a way to invest that money where it is needed from now on. It's just common business sense to not innocently donate money that I could find other, more useful uses for.

[Edited at 2007-09-22 21:35]


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Ralf Lemster  Identity Verified
Germany
Local time: 01:38
English to German
+ ...
Edit requested Sep 22, 2007

I have asked Viktoria to edit her original posting, to bring it into line with ProZ.com's scope.

Ralf


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Brigitte Hamilton  Identity Verified
Canada
Local time: 18:38
Member (2007)
German to English
I might be concerned.... Sep 22, 2007

... about losing customers with this approach.

While it may be nice to quote only in your home currency, for many customers that is a real hassle (perceived or otherwise).
I have all but stopped quoting in CAD when quoting for European customers, and I definitely noticed a difference. Granted, I am still fairly new to the business and don't yet have a customer base that maybe does not care about what currency or payment method I use. It is also more work for me, because I have to watch my rates more closely to ensure I don't lose too much. But it does not help me much business-wise if I just transfer that 'burden' to the customer by charging in CAD and thus creating somewhat of an inconvenience for them. It is like any other business - the customer wants to know what you can do for him/her, not the other way around.

For large amounts it is also possible to hedge the currency, thereby protecting your rates. This can be quite cumbersome and requires some management, but it is a fact of life when doing business internationally.

In the end, you have to decide whether what works best for you will continue to ensure that you get the business you need. It's really very simple.

All the best.


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ViktoriaG  Identity Verified
Canada
Local time: 19:38
English to French
+ ...
TOPIC STARTER
Some thoughts on Brigitte's post Sep 22, 2007

Thanks for the insight, Brigitte.

I know that this rate switching problematic can cause a bit of a headache to clients, but I don't agree that you actually need to transfer the burden to them. Here's a good way to make sure both are happy - well, at least with the smoothness of transactions.

Translator quotes in CAD but invoices in USD as per current exchange rate (quoted CAD amount x invoice date CAD>USD exchange rate = invoice amount in USD). The client doesn't have to fiddle with conversion, so it's pretty much the same scenario for them as it was before. Just don't forget to mention on the quote that the CAD amount on it is what you will get after cashing in the client's USD cheque as per invoice date exchange rate.

I find this manageable. Yes, it is a bit more hassle for you, but as far as I'm concerned, I wouldn't mind putting in an extra half hour of work per month to get a few hundred dollars more revenue.

So, is there anybody out there in Canada who has taken steps towards rectifying the exchange rate problem? Does anybody have an experience to share? Just how are we all coping with this?

[Edited at 2007-09-22 21:23]


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Juliana Brown  Identity Verified
Israel
Local time: 19:38
Member (2007)
Spanish to English
+ ...
Just last week Sep 23, 2007

I raised my prices when approached by new US clients. I admit, my hike went only partway in terms of making up the money lost by our over-eager dollar, but at least I feel a little better and have not scared the clients off.
I charge only in Euros or US dollars at the moment, unless it's a local job- that also reflects my client base at the moment- they're mostly out of the country.
The idea of charging CDN and invoicing US is not bad, but I can imagine some clients nit-picking over what "they" thought the rate was that day, if there's a sudden jump.
Have you thought of opening a Euro or USD account? I have one, since this is our second income, so I withdraw/convert only as necessary. Even if it's your main income, you may want to get one for small jobs, and let it pile up a bit...


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ViktoriaG  Identity Verified
Canada
Local time: 19:38
English to French
+ ...
TOPIC STARTER
How do you present the new rate structure to your clients? Sep 23, 2007

So, we do have someone here who has raised rates to make up for the loss over the exchange rate. Thanks, Juliana.

Did you mention to your US clients the reason behind the raise? Or did you just raise as usual? If it's the case, do you have a feeling that the clients know the reason behind this? In other words, is the entire issue of raising rates because of the exchange rate some kind of taboo when speaking to clients?

Can't wait to see some ligth shed on this...


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Juliana Brown  Identity Verified
Israel
Local time: 19:38
Member (2007)
Spanish to English
+ ...
Nope, no explanation. Sep 23, 2007

Since they were all new clients, I didn;t feel the need to justify my rates- I'll let my work do that. I had been playing with the idea of it anyhow, and our friend the loon just made it happen sooner.

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Katalin Horváth McClure  Identity Verified
United States
Local time: 19:38
Member (2002)
English to Hungarian
+ ...
There are ways to mitigate the exchange rate risk Oct 25, 2007

I think the best protection for us if we charge in our home currencies, and let the client worry about their exchange rate exposure. This is particularly true for regular clients with large jobs, where the potential of the loss over time is substantial.
However, for occasional clients, that do not agree to be billed in our home currencies, there is a way to mitigate the risk of short-term fluctuations. This also removes the room for arguments of the kind Juliana mentioned:

Juliana Starkman wrote:
The idea of charging CDN and invoicing US is not bad, but I can imagine some clients nit-picking over what "they" thought the rate was that day, if there's a sudden jump.


The idea starts with having two bank accounts, one in your primary (home) currency and one in the client's currency (your secondary currency). This is particularly practical if you do have some use of the secondary currency (travel, buy stuff from abroad, pay vendors, etc.). There is a way to use these two accounts to prevent losses from rate fluctuations, by moving money from one to the other.
Since this topic came up on several forums recently, instead of making lengthy posts at those places I decided to write an article about the method. This is not that I want to advertise it or anything, I am just trying to help, as I have been through this myself.
The article is here:
http://www.proz.com/doc/1474


[Edited at 2007-10-25 19:57]


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