Managing international receivables to save your business time and money
According to UNCTAD’s (United Nations Conference on Trade and Development) Global trade Update ,the value of global trade reached a record level of $28.5 trillion in 2021 an increase of 25% on 2020 and 13% higher compared to 2019, before the COVID-19 pandemic struck.
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 in many ways 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, challenges arise. Apart from obvious difficulties like sourcing overseas contacts accessing export distribution channels and customs issues, many businesses realise that the process of receiving foreign currency payments can also be a challenge.
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 exchange 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.
Three common issues encountered when processing International receivables are:
Billing a 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 subsequent 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.
Accounts receivable staff receive incorrect amounts due to FX markups and bank charges. This makes reconciliation difficult. There are also added complexities to contend with when reference numbers are missing.
How Fexco simplifies global receivables
At Fexco, we help our clients to collect overseas payments from their international customers, securely into a secure client segregated account. The process is cost-effective and swift, allowing them to focus on what really matters – protecting their profits and growing their business.
We ensure that foreign currency receivables 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 enhance your business relationship with your client.
How do we achieve this?
Fexco’s receivables solution offers you the option to invoice in over 25 local currencies, a strong selling point when selling goods in overseas markets. Customers receive money effortlessly into one of our incoming payment client accounts with competitive FX rates.
All clients receive notification when funds are transferred with fully referenced payments for easy reconciliation.
We can then transfer the client funds into their local currency at bank beating rates, boosting cashflow and making reconciliation simple.
Payments are often received by our clients into their account on the same day or next day.
Total FX transparency
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 provides clarity for reconciliation, gives better visibility over cashflow and avoids endless queries by finance staff over mismatched funds.
Benefits in a nutshell
- Invoice your international clients in their local currency
- Avoid maintaining expensive foreign currency accounts
- Hold funds in Fexco’s secure client segregated accounts
- Benefit from bank beating FX rates and expert guidance
- Total transparency of the process means hassle-free reconciliation
- Reduce investigations by receivables teams.
Receiving funds from overseas businesses shouldn’t be costly or complicated. Reduce the time your business spends on queries relating to receivables and receive the amount invoiced. Contact Fexco today to discover how our receivables solution will save you time and money when invoicing overseas clients.