3 ways you’re missing out by not invoicing in a foreign currency
As an SMB operating across borders, have you ever struggled with invoicing your overseas partners in their local currency? It’s a common challenge that many businesses face when trying to manage their finances and cash flow. In this blog post, we’ll explore the benefits of invoicing in foreign currencies and how it can help your business be more efficient and effective.
The challenge of not invoicing in a foreign currency to overseas partners is that it can lead to high conversion fees and unfavorable exchange rates. This can result in lost revenue and reduced profits for your business. Additionally, it can make it difficult for your overseas partners to understand the amount due on the invoice, leading to confusion and potential delays in payment.
So, why should you care about invoicing in foreign currencies? Here are three benefits:
- Cost Savings: By invoicing your overseas partners in their local currency, you can avoid high conversion fees and unfavorable exchange rates, leading to cost savings for your business. According to a study by HSBC, businesses can save up to 3% of the transaction value by invoicing in foreign currencies.
- Improved Cash Flow: Invoicing in foreign currencies can lead to improved cash flow for your business. By invoicing in the local currency of your overseas partners, you can receive payment faster and avoid delays in payment due to confusion over the amount due.
- Better Relationships: Invoicing in foreign currencies can help build better relationships with your overseas partners. By making it easier for them to understand the amount due on the invoice, you can improve communication and build trust with your partners.
Now that you understand the benefits of invoicing in foreign currencies, here are some practical tips to help you improve your invoicing efficiencies:
- Use Payment Platforms: Payment platforms like Payoneer offer billing and invoicing services that allow you to create and send invoices in foreign currencies. This can help you save time and improve accuracy when invoicing your overseas partners.
- Use Online Invoicing Software: Online invoicing software like Freshbooks and Xero offer features such as multi-currency invoicing and payment tracking, making it easy for you to manage your finances and cash flow.
- Stay Up-to-Date on Exchange Rates: It’s important to stay up-to-date on exchange rates to ensure you are invoicing your overseas partners accurately. Use market data providers like Bloomberg or Reuters to get real-time exchange rate data and make informed decisions when invoicing.
By following these practical tips, you can improve your invoicing efficiencies and take advantage of the benefits of invoicing in foreign currencies.
In conclusion, invoicing in foreign currencies can help SMBs save costs, improve cash flow, and build better relationships with their overseas partners. By using the tips outlined in this article, you too can benefit from invoicing in foreign currencies and manage your cash flow more effectively. Payoneer’s billing and invoicing services can help businesses efficiently invoice their overseas contractors and suppliers, making the process easier and more accurate. With Payoneer you can offer your clients to pay in their preferred currency via credit card, local bank transfer or their Payoneer account and, if necessary, send reminders and then track the payment until it arrives to your account.