In an increasingly globalised economy, Irish SMEs are more reliant than ever on international suppliers to source materials, products, and services. However, one key factor that is often overlooked in these transactions is the currency in which payments are made. As operational costs continue to rise, businesses must explore every avenue to enhance their financial efficiency and one such opportunity lies in dual currency invoicing.
By negotiating invoices in both euros and the supplier’s local currency, SMEs can unlock significant cost savings, improve transparency in foreign exchange (FX) rates and strengthen their relationships with international suppliers. Understanding and leveraging this practice can offer a distinct competitive advantage in today’s challenging business landscape.
The Power of Dual Currency Invoicing
Requesting invoices in both euros and the supplier’s local currency – such as GBP, USD, or Chinese renminbi, provides a clear and transparent comparison, allowing businesses to determine the most cost effective payment option.
Price Protection & Transparency
Suppliers who issue invoices in euros often incorporate an additional FX margin to safeguard themselves against currency fluctuations. These margins can range anywhere between 1% and 5%, significantly increasing the cost of goods for Irish SMEs.
For example:
A UK supplier may quote a price of €10,000 for goods that actually cost GBP £8,000. With dual currency invoicing, an SME can compare this with the current EUR/GBP exchange rate (e.g. 0.83). If the payment is made directly in GBP, the actual cost would be €9,639, yielding a saving of €361.
This principle extends beyond GBP to other widely used currencies such as USD, CNY, INR, and PLN, ensuring SMEs avoid unnecessary markups and pay a fairer price.
Enhanced Negotiating Power
Having visibility over both currency options strengthens an SME’s bargaining position. Armed with transparent pricing, businesses can negotiate more competitive rates and potentially secure discounts from suppliers who could otherwise inflate euro-based invoices to mitigate FX risks. This improved cost control contributes directly to protecting margins and boosting profitability.
Strengthened Supplier Relationships
Beyond cost savings, paying suppliers in their local currency fosters goodwill and demonstrates an understanding of their operational challenges. This approach can lead to more favourable payment terms, improved contract conditions, and better long-term partnerships. Suppliers, freed from the risk of currency fluctuations, may even extend credit lines or offer early payment discounts.
The Competitive Edge for Irish SMEs
Effective currency management is no longer just a backoffice function; it is a strategic lever for growth. By proactively managing FX exposure and choosing the most beneficial invoicing option, Irish SMEs can:
– Improve cash flow and cost efficiency
– Minimise the impact of unpredictable currency movements
– Gain a competitive edge in pricing and supplier negotiations
– Reinvest savings into business expansion and innovation
How Fexco Can Help Your Business Navigate Dual Currency Payments
Killorglin-based Fexco International Payments provides a seamless and cost-effective foreign currency payment solution for businesses seeking to optimise their cross-border transactions.
Through its innovative payments platform and extensive global banking network, Fexco offers:
– Access to over 130 currencies and payments to nearly 200 countries
– Competitive exchange rates and reduced FX costs compared to traditional banks
– Fast, secure, and transparent transactions that protect business margins
As a first step, SMEs should request dual-currency invoices from their international suppliers and compare rates. Once this information is available, Fexco can help businesses determine the most cost-effective payment option and ensure they make savings on FX transactions.
Take Action Today
For expert guidance on how dual currency invoicing can benefit your business, speak to John Barry at Fexco International Payments:
Email: jobarry@fexco.com
Direct Dial: +353 (0)66 9799041.
Visit www.internationalpayments.fexco.com/en-ie to explore how Fexco solutions can enhance your cross-border payment strategy. Your bottom line will thank you.
Photo: John Barry, Fexco International Payments, Payments & FX Consultant
