International placements have always yielded a greater profit margin for agencies that have the capability of filling these for clients. The process of making the placement overseas can be similar to making a UK placement with much larger rewards. However, there are several considerations when making international placements, with one of the main ones being how to deal with receiving (and sometimes paying) in foreign currency. It is always best to investigate the best way to minimise any currency losses on a placement before raising that all-important invoice. With that in mind, are you protecting your agency profit from currency losses? Let’s take a look.
There are several ways that you can avoid losing profit on currency transactions:
SET UP A CURRENCY BANK ACCOUNT
When receiving funds from an overseas company in currency, ensure you have the relevant currency account set up in advance. If the client invoices show sterling bank details on a currency placement, then the agency will suffer a larger loss once the funds arrive as the bank will do the currency conversion at their own rates.
CHARGE AND PAY CONTRACTORS IN THE SAME CURRENCY
When processing contractors, ensure that you are charging the client and paying the candidate in the same currency so that there are minimal conversions during the payment process. If the candidate does not have the respective currency account, this is their concern, and they should speak to their own bank instead of the agency being expected to convert the currency before transfer and suffering the loss.
ENSURE YOUR INVOICE FINANCE PROVIDER CAN FUND IN THE REQUIRED CURRENCY
Not all invoice finance companies can lend in multiple currencies, with some only being able to fund in Euros and US Dollars, so it is best to check in advance of the placement. If the placement is in a currency outside of the financiers’ capabilities, then it may be best to find an alternative provider or see if the client will revert to an alternative currency that can be funded.
ONLY CONVERT BETWEEN CURRENCY ACCOUNTS WHEN NECESSARY
Most UK recruitment agencies will be paying most of their overheads and dividends in sterling so there will be a time when currency needs to be converted. It is advisable to only convert currency amounts on a limited basis to minimise the losses incurred during these transfers.
WORK WITH A REPUTABLE CURRENCY EXCHANGE COMPANY
Although banks can convert currency when requested, the rates used are not always favourable and can mean that your company can lose significant sums on bank charges and currency losses. However, there are several reputable currency exchange companies who can provide guidance and more favourable rates for making these conversions, so it is best to explore this option.
HOW WE CAN HELP PROTECT YOUR AGENCY PROFITS FROM CURRENCY LOSSES
MAYACHI Ltd works with multiple recruitment agencies making placements worldwide and in various currencies and provides advice on ways to mitigate any currency losses. We have numerous relationships with invoice finance providers who can fund international placements, and currency exchange companies who can provide currency bank accounts and foreign exchange services at favourable rates. If you’re making international placements, get in touch and let’s see how we can help your recruitment agency, and make sure you’re following us on LinkedIn!
