When conducting international business, whether for travel or working with foreign clients, business owners may need to approach money management differently.
It takes finesse to properly handle currency transactions, payments and understand local business etiquette. Three successful entrepreneurs give their tips on what works for them.
1. Keep track of your business credit or charge card activity when traveling.
Bobby Harris, CEO of BlueGrace Logistics, notifies his credit card company when he's traveling abroad, and says that helps prevent his cards from being denied by merchants when he's overseas. He also reviews his daily purchasing activity. Not only does it help him grasp how much he's spending in dollar terms, it's also a security feature.
“I encourage people to pull up their account and see what kind of activity is on there. Sometimes you might be surprised—you might have been overcharged, or maybe you'll find something a little bit more nefarious," he says.
Having the transaction on a business credit or charge card means business owners who need to dispute a charge have an extra layer of financial protection from their card issuer while the details are sorted out, Harris adds.
2. Avoid carrying wads of cash.
Both Harris and John Person, founder of Persons Planet, an educational and advisory service company for stock traders, says people worry unnecessarily about having cash on hand when they arrive.
Person says buying foreign currency stateside means hefty transaction fees. Business owners who want a little local currency in hand are better off hitting an airport ATM that is in their bank's network at their destination. Otherwise, both Person and Harris say, try to use business credit or charge cards as much as possible. Harris tries to use as little cash as possible.
“Some people make a recommendation to use your credit cards less. I use it more. I feel that it's much more secure. I don't like converting cash and I don't like being subject to the [higher] currency exchange rate when doing so," Harris said.
3. Consider topping up your travel insurance.
Person recommends business owners invest in travel insurance, and if necessary, people with pre-existing conditions should buy extra health insurance. Some airlines may reimburse $500 for lost luggage, but he says that barely covers the cost of a suit and dress shoes.
Person says last year airlines lost his luggage, but the additional travel insurance helped cover the extra costs. “You may have two suits and two pairs of dress shoes. That could be $3,000 in your luggage and the airlines will only give you $500. You're out the rest. If you buy additional insurance, you're better off," he says.
4. Have sizeable buffers in your cash flow.
When Person negotiates speaking fees, he sometimes can get paid half up front and half after the speech. It's not unusual that the company won't pay until after services are completed. “You still have to get there, and anything can happen between the time you're hired as a speaker and the speech. It's not like you're at a local venue," he says.
After his speech, the organization will wire payment to his bank account, and Person's bank will deal with the currency transactions. There is a risk of currency fluctuations between the date of when he agrees to speak and the actual speech date, but he says that's usually not an issue. “If the Euro goes from $1.13 to $1.20, that's not really a big thing, unless you're getting serious money," he says.
Some people make a recommendation to use your credit cards less. I use it more. I feel that it's much more secure.
—Bobby Harris, CEO, BlueGrace Logistics
Add buffers when invoicing and expecting payment, says Lee Travers, an Ireland-based financial technology entrepreneur and the chief executive officer of iamMoney. Some countries may have different views on when invoices should be paid. “In some countries you may agree to terms of 60 days, for example, and they may have a more laissez-faire approach to paying that," he says.
On the other hand, he had some smaller companies who paid invoices ahead of schedule because they wanted to be seen as good partners. However, these companies weren't necessarily receiving payment from their suppliers on time, which meant these smaller companies were suffering from their own cash-flow problems on their receiving end.
“You have to work all of [these scenarios] into your cash flow because you just never know," Travers said.
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