Globalisation is having an impact on businesses around the world. According to WHO figures, World merchandise exports in 2018 totalled US$ 19.48 trillion, up 10% from the previous year.
Traditionally, international trade has been dominated by the larger companies, capitalising on their scale to access global markets with ease.
This is no longer the case, thanks to a large degree to advances in digital technology. Today, small and midsize enterprises (SMEs) are extending their reach globally, participating in exporting and contributing to job creation in established and growing economies.
When a business goes global, there are challenges that arise. Besides obvious difficulties like sourcing overseas contacts and accessing export distribution channels, not to mention customs issues and associated bureaucracy, many businesses realise that the process of receiving overseas payments can pose challenges of its own.
Challenges of international invoicing
Domestic billing is straightforward. Familiar currency, simple format and straightforward methods of payment make the process less complex and quite transparent.
When receiving payment on an international invoice however, businesses must deal with a lot of complexity around foreign currencies, FX rates, bank fees and regulatory compliance issues.
Very often, the amount invoiced is not what is eventually received due to hidden fees by the sending, intermediary or receiving banks. This is before one considers foreign currency market volatility, reducing the amount received even further.
Two common issues encountered when processing International receivables are:
Billing an overseas client in your local currency
To get around the FX problems associated with international invoicing, many businesses request payment in their own currency. This however places the task of exchanging currency and potential loss on the international client, an issue that could lead to fractured relations and potential loss of future business.
Losses on foreign exchange
When an international client is invoiced in their local currency, the currency received needs to be transferred to the receiving organisation’s local currency.
Often, the receiver’s bank exchanges the funds but applies uncompetitive FX rates and fees incurring further losses on the final amount. An alternative is to set up local accounts in overseas destinations but the cost of maintaining these can be counterproductive.
How Fexco simplifies global receivables
At Fexco, we help our clients to collect overseas payments from their international clients, securely cost-effectively and quickly, allowing them to focus on what really matters, protecting their profits and growing their business.
We ensure that payments, especially across borders, aren’t an obstacle for successful business growth. You can bill your overseas clients in their local currency, making it easier for them to pay you on time without any complications. This also helps to cement your business relationship with your client.
How do we achieve this?
Fexco maintains several foreign currency accounts which enables us to receive client funds seamlessly with full transparency.
We can then transfer the client funds into their local currency in their own country at bank beating rates boosting cash flow and making reconciliation simple.
Payments are often received by our clients into their account on the same day or next day but the decision on when to transfer the held funds always rests with the client.
Many businesses avail of Fexco’s rate watch facility which monitors movements in the exchange rate. When the rate moves in the client’s favour, our dealers will notify the client and the held funds can then be transferred to the local currency account.
Total transparency in FX process
When businesses receive foreign currency payments into their local currency accounts (usually at their bank), these funds are exchanged with high margins applied. When it comes to reconciling accounts, the business very often sees a discrepancy between the original amount invoiced and funds that are finally received.
The Fexco solution removes any unexpected and unwelcome surprises around the amount received.
Our dealing team guides each client through the process explaining rates applied and what the client receives into their local currency account. This makes for error free reconciliation and reduces queries by finance teams.
This provides clarity for reconciliation, gives better visibility over cash flow and avoids endless queries by finance staff over mismatched funds.
Summary of benefits:
- Invoice your international clients in their local currency
- Avoid maintaining expensive foreign currency accounts
- Hold funds in Fexco’s FX accounts until you decide the time is right to transfer.
- Benefit from bank beating FX rates and expert guidance
- Total transparency of the process means hassle-free reconciliation
- Reduce investigations by receivables teams.
Reduce the time your business spends on queries relating to receivables and receive the amount invoiced. Contact Fexco today to discover how a receivables solution will save you time and money when invoicing overseas clients.