Monday, January 7, 2013

Money, Euros, Dineros: What Every Small Business Needs to Know ...

We live in a smaller world than the generations that came before us. Connecting with people thousands of miles away is? much easier than it?s ever been. As a result, small businesses are running international operations with little more than an Internet connection and a desire to reach customers around the world. On one hand, you now have the opportunity to sell your services to people all over the world, or see your products in the hands of people who may not even speak your language. On the other hand, you suddenly have brand new headaches, like foreign currency conversions.

When parties with two different nationalities do business, you have the added difficulty of dealing in two currencies. One or both parties have to perform currency conversions as a part of business transaction. If this becomes a regular part of your business, knowing a few handy tips can make the process much easier.

As unbelievable as it sounds, many small business owners don?t realize how much currency conversions can fluctuate over time. They think that once they?ve got the conversion rate between two currencies, that?s that. The truth is that when you do business overseas, you learn that conversion rates are relative. Rates can literally change overnight based on anything from political trends to public debt.

If you want to do business in multiple currencies, you need a keen eye on the markets you?re doing business in. Check rates daily in each market you?re affected by. Pay attention to what?s going on with those countries so you understand how and why the fluctuations occur when they do.

Working in foreign currencies means finding a convenient and trustworthy foreign exchange (forex) broker. Forex brokers work with multiple currencies, offering competitive exchange rates. One broker may work within several currencies or specialize in just converting one particular currency to another. There are a number of options out there and with a little research you can find the one for you.

But one option you may want to skip is using your bank to make international conversions frequently. Banks have notoriously bad exchange rates. You can certainly find a better rate by researching your forex broker options and choosing one with competitive rates.

The best way to deal with foreign money conversions is to avoid the conversion altogether. Ask your clients or customers to pay you in your own currency instead of theirs. For example, if you sell your products or services online, you would only take American dollars, placing the burden of conversion on the buyer. If you?re dealing with a supplier, you might make a deal directly with your contact there to be make payments in your own currency.

Sticking to your own currency makes it easier to understand exactly what you?re receiving without worrying about the price of tea in China. How well this strategy works depends on who you?re doing business with and how flexible they can be. You?ll always fare better if your product or service is in high demand.

Princess Jones is the evil genius behind P.S. Jones Communications, where she helps small businesses speak to their audiences in a language they understand. To connect with her, follow her on Twitter @iampsjones.?

WePay

Source: http://blog.wepay.com/2013/01/07/money-euros-dineros-what-every-small-business-needs-to-know-about-currency-conversions/

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