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Canadian exporters can sharpen their competitive edge in the global marketplace by invoicing in foreign currencies.
According to a Salesforce survey¹ involving 6000 consumers, the overwhelming majority of respondents expected businesses to understand their needs and preferences and to meet their expectations. This sentiment is as true for domestic clients as it is for international clients.
So, finding a way to keep your international clients happy is essential. One way to improve the international customer experience is by pricing and issuing invoices in a local currency.
Here are the top reasons and benefits of quoting your international customers in their local currency.
When working with international clients, finding out which currency they prefer to use is essential. Generally, people prefer transactions in a currency they're familiar with, usually their home currency. Hence, if you have always billed in the currency you wish to receive with no regard for clients, it may be time to rethink this practice.
Invoicing in the local foreign currency of your clients puts their needs first. It's crucial to growing sustainable customer relationships and opening up revenue opportunities. Your international customers are more likely to understand the value of your offers, and it makes the ordering process easy. Also, invoicing customers using terms they understand ensures they make a more informed decision.
It's all part of improving the customer experience, which positively impacts sales.
One of the keys to successful global expansion is providing flexible payment methods preferred by your customers. On the other hand, forcing your customers to accept the currency risk by invoicing in your own currency can make your business less appealing.
Remember, most global customers are spoilt for choice. They'll turn to local suppliers or more considerate international businesses to eliminate the risk of currency conversions. Therefore, walking in your customers' shoes and meeting them halfway is imperative. Allowing international customers to pay in their local currency can significantly benefit your competitive edge. The key is to balance this with a comprehensive foreign exchange risk strategy.
Not invoicing in local currency can cause confusion about the actual cost of your products or services. Additionally, when you ask customers to absorb currency conversion costs, they expect you to lower your prices for the overall costs to remain reasonable.
When your customers no longer have to deal with the foreign exchange risk, the negotiating advantage becomes yours. This is an excellent opportunity to improve your profit margins because you're making life easier for your international customers.
You also have more control regarding the efficiency of your payments. For example, if you're importing and exporting goods from the same country, you can use the foreign receivables to pay suppliers. This eliminates the foreign exchange risk on your end, which is a win-win.
Here's the dilemma: While it's true that billing foreign customers in their local currency is better, it also leaves you vulnerable to exchange rate movements. By eliminating this concern for your customers, you have assumed the currency risk yourself and any associated costs. This seems like a surefire way to watch your profit margins plummet, but wait …
Here's the solution. There are currency risk management tools you can use to hedge against the volatility of the FX market. For instance, when you're receiving foreign exchange payment through a currency specialist like MTFX, you can mitigate the risk in the following ways:
Invoicing in foreign currencies is simple – if you use the right international payments specialist. With MTFX, you don't need multiple foreign-denominated accounts to start billing international customers in their local currency.
Instead, you only need five minutes to register your account, which comes complete with a full suite of global payment solutions, including multi-currency capabilities. That means your business can offer customers the chance to pay in the currency they have at their disposal.
With MTFX, you don't have to pay over the odds because our exchange rates are 3-5% more competitive than your bank and our transfer fees are low, helping you save on exchange rate margins.
Your MTFX business account also comes with access to risk management tools and dedicated currency specialists to maximize the value of your foreign receivables.
Register your account with MTFX today to enable your customers to pay in local currencies and to receive funds easily.
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