Is Billing Foreign Customers In Their Local Currency Better?
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.
Three reasons to invoice foreign customers in their currency
Here are the top reasons and benefits of quoting your international customers in their local currency.
Create a positive impact on sales
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.
Become more competitive in foreign markets
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.
More control over business operations
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.
What about foreign exchange risk? - The solution
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:
Use forward contracts to lock in your desired rate when buying a certain amount of currency for a future exchange. That means you don't have to worry about unwanted exchange rate fluctuations while you wait for the scheduled payments.
Use market orders to target your desired rate while managing your downside risk.
Open a multi-currency account to control your incoming payments without the complexities of opening and managing foreign bank accounts.
The easy way to accept international payments with MTFX
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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Who can use the MTFX payment service?
Individuals and businesses who need to send money in foreign currency internationally can use MTFX’s services. The beneficiary of the transfer must have a bank account for the funds to be paid into.
Personal clients usually use our services to transfer money between their own accounts in two different countries.
Business clients usually use our services to transfer funds to suppliers, fund international operations, or repatriate overseas earnings.
Why should I use MTFX and not my own bank?
MTFX offers currency exchange rates that are 2-5% better than those offered by the banks. Personal clients usually save hundreds of dollars per transfer and for larger transfers, the savings can run into the thousands.
We also offer excellent customer service, dedicated currency specialists, and a 24/7 online platform with best-in-class technology that allows you to complete transfers from any device virtually anywhere in the world.
Business customers save with better currency exchange rates and proven solutions geared towards managing and mitigating foreign exchange risk. Our solutions include forward contracts, market orders, rate alert services, and much more - all backed by great technology and great people.
How do customers send funds to MTFX?
Funds can be transferred via wire transfer, Electronic Funds Transfer (EFT), or ACH payment services. MTFX maintains bank accounts in all major currencies with highly-rated banks. Our banking infrastructure ensures that you can transfer funds to us quickly and securely.
How long does it take MTFX to transfer funds?
Our global network of banking partners allows us to get funds to virtually anywhere in the world quickly and efficiently. Most wire transfers from MTFX will be received by your beneficiary within 24-48 hours. MTFX also offers same-day transfers that are almost instantaneous, as well as low-cost in-country payment services for your less urgent transfers. For further information please speak to one of our currency specialists.
Please read the following update before logging in to your MTFX online account
We have updated our online dealing system to provide you with better functionality, more unique tools and an overall enhanced client experience. MTFX Online 2.0 is now available for your dealing needs. You can begin using our enhanced online portal today.
Please note that the traditional portal will be available for use until MAY 30th 2021 at which point it will be decommissioned.