Advice on charges on international payment

[Cracker1]

Good Morning,

We need some advice on charges on international payments against our invoices please.

We provide design services for a small company in Dubai; when we receive payment we incur both the sender's charges and a further charge from our bank before it reaches our account. The payment is made in AED so we are at the mercy of the exchange rate as well. This means the amount we receive is considerably less than invoice. For example, on an invoice for £400.00:

We have received £378.34
Senders fee is £10.24
Our bank charge is £6.00

We are a relatively new business and not sure whether this is as should be expected for international trade, or, quite frankly, whether the client is taking us for a ride! Payments from US / European clients have not been affected in the same way.

Should we be responsible for both sets of fees, only our bank ones or should the sender be responsible for both and ensure that the end amount we receive equals the invoice amount?

If we are responsible for any of the fees/exchange rate fluctuations, how do we then account for the difference in amount invoiced and received - none of the fees are shown in our bank account, just on advice notes before payment reaches the account.

Thanks in anticipation,
Gilly

 

[andygambles]

In these cases unless specified otherwise you split charges. So the sender pays theirs and you pay yours.

Are you invoicing in GBP? If so you should be requesting payment in GBP.

 

[Cracker1]

Thanks Andy - splitting charges seems fair.

We do invoice in GBP - and GBP is what is credited to our account; however the instructed amount is always in AED with applicable exchange rate.

Should the client have the ability to pay direct in GBP?

 

[Walkol]

Should the client have the ability to pay direct in GBP?

Yes. But it depends on what you have written in your contract. They should (IMO) be sending GBP, so with the charges, it should be...

Received £383.76
Total charges £16.24
Total - £400.

They should also be paying their charges, you should (IMO) pay what your bank charges you.

 

[Mister B]

I agree that it should be as laid down in the contract, but it is the norm for each party to pay their own charges.

You should also be paid in GBP's and physically receive £400 regardless of charges, either yours or theirs. That's what you've invoiced that's what you should receive.

You should not be bearing the cost of currency fluctation.

I would go back to them and raise the question-you need to do it now as otherwise you've let them set a precedent.

Mister B

 

[andygambles]

As per Mister B. They should be sending you GBP not the AED equivalent of GBP. That means they bear the exchange rate cost and you do not have any just the bank charge for receiving the international payment.

It is norm, and courtesy, to split charges however our invoices state client must pay all charges. So if we invoice £400 we receive £400.

 

[Cracker1]

Thanks all,

I'll check our T&Cs, though I have a suspicion it may not be specified (note to self - must amend asap...). It may be that we amend these to cover all charges, as these are not large amounts of money and every little helps!

 

[MRam]

Hi there, yes I agree with Gilly's comment -

You can shop around for currency transfer quotes and make sure that you are getting the best rate from an FSA authorised foreign exchange provider. Typically, a foreign exchange broker's rate can be up to 4% better than the banks. This may not sound a lot but when you're transferring thousands or hundreds of thousands, it really does make a huge difference!

I'm from Halo Financial, a UKbusinessforum partner, so if you are interested in finding out how we can help you then feel free to send me a private message. Otherwise, just make sure you use a trusted broker with segregated client accounts, that is FSA authorised.
Our website is www.halofinancial.com
Hope that helps
Mark

 

[Raw Rob]

Try and get your client to pay with something like www.currencyfair.com which will probably save them money by getting a better exchange rate and much lower fees.