Dual Currency Invoicing: Why Irish Small Businesses Should Consider Paying Overseas Suppliers in Local Currency

As Irish small businesses are facing rising operational costs, one often overlooked area for cost savings is cross-border payments processes. In today's interconnected global marketplace, Irish small businesses are increasingly engaging with international suppliers to remain competitive. With customers now buying supplies in currencies ranging from US dollars to Chinese renminbi, understanding the benefits of paying in local currency could give your business a competitive edge.

The Power of Dual Currency Invoicing

Here's why requesting pricing in both currencies (EUR and GBP in this case) is the best option.

Price Protection

• If the invoice is only in euros, the supplier will typically add anFX margin (from anywhere between 1%-5%) to protect themselves against currency fluctuations.
• When you also get the price in GBP, you can see the actual price before this markup in EUR.
• Example: A UK supplier might quote €10,000 for goods that actually cost GBP 8,000. With dual currency invoicing, you might see that at the current EURGBP rate of 0.83, if the company paid the supplier in GBP, it would equate to a cost of €9,639 (a saving of €361).

The same principle will also apply to a range of exotic and non-major currencies also to Chinese renminbi, Indian rupee, Polish zloty etc

Apart from rate transparency, dual currency invoicing also has the following advantages:

• Negotiating Power

Understanding the true cost in both currencies strengthens your negotiating position. You might find that paying in local currency results in better pricing, as suppliers often build in a cushion to protect themselves against currency fluctuations when invoicing in euros (as in the example above).

• Strengthened Supplier Relationships

Paying in a supplier's local currency demonstrates a commitment to their business environment, fostering trust and goodwill. This approach can lead to extended payment terms and more favourable contract conditions, as it eliminates the supplier's exposure to foreign exchange risks.

As global trade continues to evolve, efficient currency management becomes increasingly crucial for Irish small businesses' competitiveness. By making informed choices about currency payments, businesses can protect their margins and invest the savings in growth opportunities.

As a first step, ask your international suppliers for dual-currency invoices and explore beyond your bank's foreign exchange services.

Once you have this dual-currency invoice talk to Fexco who can help you to save money versus your current bank on your international payments.

Your bottom line will thank you.

Fexco International Payments, now part of the SFA Member Advantage Area, can help you. Through its innovative payments platform and global banking network, Fexco enables companies to send funds in over 130 currencies to almost 200 countries worldwide, and removes the high costs associated with traditional banking cross-border payments.

To find out more about the exclusive Fexco offer for SFA Members, please check the offer page here.