Managing Currency Conversion
When engaging talent around the world, there is a requirement to pay workers in the local currency, although come currency, for example the US Dollar, is accepted and even preferred in some regions.
For U.S. based companies, being invoiced and making payment in USD is ‘business as usual’. However, for U.S. businesses that have operations in other countries, payments will often need to be converted into the local currency where the work is being performed.
For non-U.S businesses, the same applies when engaging talent around the world. More often than not, a currency conversion will be required, in order to pay the worker in their local currency, or to convert the currency into a ‘preferred’ currency.
Either way, currency conversion is something that businesses with global operations will need to be aware of and manage appropriately, in a costly manner.
Conversion rates can change on a daily basis, making it more complex for businesses to stay on top of the rate and ensure they are not loosing funds due to fluctuations in currencies. Financial institutions are also at liberty to raise conversion rates and costs to their clients.
The Wall Street Journal published an article detailing how American Express Company’s foreign exchange unit used low currency conversion rates to attract new business clients and then went on to raise the conversion rates and subsequently their prices. Click here to see the full article.
“This is one of many downsides that occur when companies provide B2B currency conversion without a compliance arm. It’s enough that SMBs have to worry about labor compliance when performing global payment transactions. It’s another headache that the company performing the transaction is not truthful about the fee rates, thus depleting businesses of their earned income. A trusted payment facilitator will always have a compliant division that oversee’s global laws coupled with accurate costs and transparency associated with the transactions.”
Lou Calamaras, CCWP, Global Client Director
CXC Global North America
CXC Global manages currency conversions on behalf of its clients and partners, when invoicing and facilitating payments to contractors around the globe and have been doing so for over 26 years, with a presence in over 70 countries.
Contact us to speak with one of our global specialists about how we assist companies around the globe to manage currency conversion when making payments to their contingent workers, or contact Lou directly.
Written by Kathryn Hopkins