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5 questions accountants should ask clients about their foreign trade

Accountants and independent finance directors are among the most trusted sources that small businesses turn to for help with their finances and risks, including those arising from their international trade.  As with anything, asking the right questions can help give the most relevant advice. We list below the top 5 questions that help better understand the risks, pain-points and costs from foreign trade that a company may have.

1. Describe your typical cycle from a foreign order until the currency invoice is paid/collected

Businesses are often exposed to currency risks even before invoices in foreign currencies are recorded in AP/AR ledgers. Whether it is a purchase order placed for widgets made in China or a sales contract for services to be delivered in the coming months if they were contracted in foreign currencies, this may mean financial risks for the business.

2. Why do you currently manage your international payments the way you do?

Most people tend to focus on “how" and then jump to their solution recommendations that clients meet with a rebuttal. Take time to understand why your client does something their way - have they considered alternatives but have their reservations/perceptions?

3. How would you ideally manage your international invoices, payments and collections?

Help your clients think about how they would like to do things - this “big picture” question assesses the most important factors, components of an ideal solution. At HedgeFlows, we regularly find that growing businesses want to trade more internationally and simply manage their finances in their home currency - something that has become part of our company’s brand promise.

4. What would be one thing you would change about your international invoicing & payments if you had a magic wand?

Sometimes clients assume things can’t be done differently - asking the "magic wand" question can help to unearth such assumptions. For instance, many clients are surprised that booking foreign exchange in advance can be made as simple as booking an Uber.

5. What would you do if international suppliers hiked their prices or foreign buyers demanded a discount of an extra 5%?

One of the easiest ways for clients to relate to the effect foreign currencies may have on their business is by comparing it to surprise cost hikes/price cuts in underlying products. A 5% move is a plausible scenario for a currency swing and discussing how clients would deal with this helps assess one’s options.