| Pages in topic: < [1 2] | Poll: Does currency conversion negatively impact your earnings? Thread poster: ProZ.com Staff
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I try to avoid currency conversion. Most of my clients pay me in Danish Kroner, and some in GBP. I have accounts in both currencies, and spend the GBP in the UK and the DKK in Denmark. I do have to convert to Swedish kroner if we visit Sweden, but that does not affect my earnings, and I need euros on visits to Germany or anywhere else in the Eurozone, but those are usually for private purposes.
I invoice my client in Norway quarterly, to keep conversion charges down, because guess w... See more I try to avoid currency conversion. Most of my clients pay me in Danish Kroner, and some in GBP. I have accounts in both currencies, and spend the GBP in the UK and the DKK in Denmark. I do have to convert to Swedish kroner if we visit Sweden, but that does not affect my earnings, and I need euros on visits to Germany or anywhere else in the Eurozone, but those are usually for private purposes.
I invoice my client in Norway quarterly, to keep conversion charges down, because guess what, the Norwegians have their own Kroner too! ▲ Collapse
| | | | Dan Lucas 
United Kingdom
Local time: 07:16
Member (2014)
Japanese to English
| A bit more nuance | Oct 1, 2022 |
Dan Lucas wrote:
Surely it would only be negative...
...if the currency were to move only in one direction.
To explain my earlier and rather gnomic comment, let's assume you are resident in the UK and all your clients are in the US. You translate from your source language into English and charge $0.1 per word. A 10,000-word job therefore nets you 1,000 US dollars(ignoring transfer fees, etc. for the sake of simplicity).
On 1st October 2021, when the exchange rate was 1.35 US dollars (USD) to the British pound (GBP), that $1,000 would have converted to £740.74. Today, on 1st October 2022, with the rate at 1.11, that $1,000 would convert to £900.90. The stronger dollar is a positive for your dollar-denominated business.
Of course, if the exchange rate goes back to 1.35, your converted revenues will decline again to £740.74. So that's a negative. It is partly because exchange rates fluctuate that it's hard to say whether the impact of forex is positive or negative. Positive or negative relative to what, or indeed when?
There is also the issue of price competitiveness. Suppose you invoice your US-based clients in pounds. In doing so you effectively shift the risk of exchange rate volatility from yourself to the client. Fine, if the client will accept that, but then the price paid by the client will fluctuate even if you keep your rate unchanged, which may encourage them to switch to other suppliers.
Let's assume you charge £0.10 per word to a US-based client. A 10,000-word job would therefore be invoiced at £1,000. A year ago, buying those pounds with which to pay you would have cost your US client £1,000 x 1.35 = $1,350. Today it would cost them £1,000 x 1.11 = $1,100. So the weak pound has made your services (on a like-for-like basis) more attractive to US-based clients today than they would have been 12 months ago.
[On the other hand, the weak pound has also made products and services from the US more expensive. You can either pay more for those US products and services, do without them, or find an alternative supplier in the UK. US-based freelancers who invoice UK-based clients in dollars will be less competitive because the stronger dollar (weaker pound) now requires their clients in the UK to pay more in GBP terms for the same amount of work.]
If the pound strengthens and goes back to 1.35 to the dollar, your services - which are invoiced in GBP in this scenario, let's remember - become less attractive in relative terms to US clients, and US-based freelancers invoicing in USD will also be more attractive to UK-based clients.
And this is before we start thinking about translators changing rates in response to their environment. These freelance transactions are a microcosm of the wider economy. It can be complex and is seldom as simple as weak pound (or dollar, or yen, or euro...) bad, strong pound good.
Dan
| | | | | Yes, unfortunately. | Oct 2, 2022 |
I do have one agency I work with that pays me in yen, so with conversion rates being so terrible at the moment I wind up losing hundreds of dollars if I convert my pay to USD right away.
Luckily, I’m in a position where I can leave their payments unconverted in my Wise account for now. Here’s hoping the rates go back to normal soon.
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