Manage your firm’s operational efficiency with Future Payments
Simplify and help save while paying foreign invoices.
Simplify and help save while paying foreign invoices
Law firms dealing with foreign associates understand the added costs that often arise from currency exchange rates. Paying foreign bills on behalf of clients and recuperating that expense through invoicing, means law firms can find themselves incurring losses and burdened with complex reconciliations. With foreign exchange rates in constant flux, the payment amounts you receive from your client may not equal the total you originally invoiced. How often has your firm written off a loss, or dealt with the hassle of rebilling a client in a situation like this?
Cash flow is critical to every business, including law firms. However, many firms send out invoices for foreign billings based on the current foreign exchange rate (known as the ‘spot rate’) and accept currency fluctuation as a cost of doing international business. Time is money for law firms, and monitoring currency markets to help ensure your invoices are in line with current exchange rates is a time-intensive task.
A simple way to achieve this is to lock in an exchange rate using our Future Payments solution, which can help provide certainty to your cash flow while helping your firm operate more efficiently. The following article examines how Future Payments work and how your firm can benefit.
How currency fluctuation can impact your firm
Your foreign associate in the UK bills for £1,000 GBP
On receipt of this bill you invoice your US based client in USD, which totals $1,300 USD
However, by the time the invoice is due, the exchange rate has fluctuated and £1,000 GBP now costs $1,360 USD
The difference of $60 USD needs to be written off, or re-billed to your client.4
In a volatile and uncertain global environment, it is important to develop a strategy that helps alleviate the impact exchange rates can have on your firm, both financially and operationally.
Help protect cash flows
The potential impact a foreign currency could have on an international transaction, and therefore cash flow, is known as currency risk. All types of businesses, including law firms, face the challenge of managing currency risk. While this may sound daunting when your core business is law, as opposed to trading foreign currencies, with the right tools and some specialist support, it is possible to help minimize the cost of currency fluctuation without straining your resources.
Delas adds, “Our Future Payments solution can help alleviate efficiency challenges, free-up cash flows, provide clients and foreign associates with payments transparency and allow law firms to focus on their core business.”
A Future Payment is a solution offered by Western Union Business Solutions to address these concerns. It enables law firms to lock in a current rate of exchange to pay for an invoice at a later release date. Future Payments do not require the firm to lock in a minimum amount of currency, and the funds can be utilized at any time within a window of up to 365 days.
How Future Payments work
1. Your foreign associate in the UK bills for £1,000 GBP.
2. Your firm locks in an exchange rate with Western Union Business Solutions and bills a fixed USD amount to your client $1,300 USD.
3. Your firm settles the payment for $1,300 USD within a window of up to 365 days, and Western Union Business Solutions sends £1,000 GBP to your foreign associate. (Your firm has no need to reconcile the invoice, rebill your client or absorb any costs due to currency fluctuations.)
Manage the efficiency of your firm
Cash flow certainty is not the only benefit Future Payments provide, according to Delas, “By avoiding the need to rebill or credit clients for estimated costs, firms can also manage the efficiency and productivity of their operations. Reconciling invoices, managing P&L sheets and forecasting budgets can all be streamlined when the firm has confidence in its invoice currency rates.”
Part of the Western Union Business Solutions Future Payments offering is the ability to manage these payments from an intuitive online platform tailored to the needs of law firms. Operational efficiencies can be managed in the following ways:
Simplify reconciliation by utilizing customizable fields to feature information such as Invoice #, Invoice Date, Matter #, Description/Narrative, Vendor ID or any other special details required. This information can also be uploaded into your practice management software.
Quickly release payments to multiple associates in multiple currencies via one transaction through payments aggregation
Help reduce manual processes and the chance for error
Convera has based the opinions expressed in this webpage on information generally available to the public, and such information or opinions are strictly for illustrative purposes only. Business between you and Convera shall be governed by the applicable terms and conditions provided to you before you undertake any transaction or commercial relationship with Convera.