It’s important to understand how exchange rates can impact your business
particularly when considering how much to charge.
Exchange rates can change daily.
You should keep a close eye on exchange rates in your chosen market
and research any factors that could influence them, to avoid losing money.
Consider your invoicing currency
Think about whether you’ll charge for your goods or services in pounds
or another currency agreed with your buyer.
They will have an interest in this decision too, wanting the best deal for them.
So be prepared to negotiate. Dollars and euros are common choices.
Invoicing in pounds may be the option with least risk
but consider your buyer's situation.
Invoicing in a foreign currency
Sometimes invoicing in a buyer's currency could help you win orders.
And in certain markets, it may be expected. Be prepared for invoice values to rise
or fall depending on the exchange rate.
Reducing risk
If you invoice in another currency there are things you can do to reduce risk.
Including, agreeing to setting in advance the exchange rate on the day of payment.
Or if you can't set it, charging extra to cover your costs.
Getting paid into a foreign currency account.
And negotiating payment terms over shorter periods, as the longer you wait for
payment, the greater the risk of currency fluctuation.
Think how a link between pricing to exchange rates may have a long term impact.
If import prices rise in your target market
and your business keeps its prices constant
that may help to grow your market share.
Remember, you can speak to your bank or a specialist
exchange rate service for tailored advice.