by Stewart Roberts
Even with Brexit looming there are still plenty of international recruitment opportunities for UK agencies to take advantage of. However, making a currency placement can have its own pitfalls as the exchange rates fluctuate on a daily basis and bank accounts work on a buy rate and sell rate. This means that when a currency amount is converted back into sterling (either within the management accounts or between the bank accounts) this can cause either a currency gain or a currency loss.
Ask yourself the below questions to see whether you are taking the correct steps to ensure that you are reducing the chance of losing profitability through currency losses on international placements:-
HAVE YOU GOT THE APPROPRIATE BANK ACCOUNT(S) SET UP?
Once you have made a permanent or contract placement in currency, your next phone call should be to your bank manager to get the appropriate currency account set up. Ensuring that your clients can make payment to the same currency account will ensure that when payment is made no profit is lost in the conversion on the day the client makes payment.
ARE YOU PAYING AND CHARGING IN THE SAME CURRENCY?
When making a contract placement, it is always advisable to ensure the candidate is paid in the same currency as the client is being invoiced to avoid any risk of currency losses. You do not want one currency to dramatically change that turns any profit into an overall loss, especially if the placement is for a long period where the sustained loss can have a long term effect on turnover and profits.
CAN YOR INVOICE FINANCE COMPANY PROVIDE CURRENCY FUNDING?
Not all invoice finance companies can provide funding in currency and is they can, some providers may only be restricted to EUR and USD. If you plan to make currency placements, ensure that you know exactly who/ what your invoice finance company can/ cannot fund. By having the correct ledgers set up, this will ensure the funding to your bank account is in the correct currency to pay the contractor and also that the payment made by the client will be received in the same currency.
ARE YOU MAKING UNNECESSARY CURRENCY CONVERSIONS?
Although any currency placement can be lucrative for an agency, there is always a point where the profit needs to be converted back into sterling in order to pay suppliers/wages or be distributed as dividends. It is advisable to only convert any currency amounts into sterling when absolutely required. It is also logical to monitor the exchange rates to see when the best time could be to convert into sterling or use an FX exchange company to fix the rate of conversion.
TBOS has many years’ experience of working with agencies that make currency placements and we give as much help and advice as possible in order to eliminate and reduce any currency losses. TBOS will always look at ensuring that the agency has the correct currency bank accounts and if funding is required, that the invoice finance company can fund in the same currency.
For more information on how you can help with your international currency placements, please contact our office.