Carine Gursky, Managing Director, Foreign Exchange Sales Manager, Wells Fargo
Business today is truly global, and corporate meetings and events are no exception. From sales meetings and customer conferences, to executive retreats and industry trade shows, companies regularly host events in international destinations. Even corporate board meetings and incentive travel now bear a global footprint.
In 2016, top European meeting destinations included London, Barcelona, and Amsterdam. In the Asia Pacific region, Singapore, Sydney, and Kuala Lumpur were most popular.1
Managing costs amid unpredictable exchange rates
While foreign destinations offer unique appeal, international venues and foreign currency payments can add complexity and budget challenges when planning an event.
When budgeting, companies may account for costs in U.S. dollars, even while making and accepting payments in foreign currencies. However, because the foreign exchange (FX) markets fluctuate constantly, it can be difficult to accurately calculate your event’s potential revenue and expenses. Worse, an unexpected change in exchange rates can cause your costs to spike and undermine your profits.
A second challenge occurs with individual payments. Attendees and suppliers expect to transact in their local currency, and using their preferred payment method. This often requires organizers to have a bank account that supports each foreign currency, as well as access to multiple payment systems, such as credit cards, global ACH, and wire transfers.
Unfortunately, opening a bank account in another country can take months, due to strict financial regulations; in some cases, it’s simply not possible for a U.S.-based company to obtain an in-country bank account.
Six cash management best practices
Fortunately, advance planning, experienced guidance, and the right banking services can help you reduce your risk, streamline your payables and receivables, and keep your event budget on track.
For your next international event, follow these six cash management tips:
- Start early. From time zone differences to international regulations, it’s best to allow extra time for international projects. As soon as you’ve identified your event location, date and budget, start planning with your bank. Look for a financial institution with dedicated, experienced specialists in foreign exchange and global payments. Within your organization, involve both finance and your event planning staff.
- Set up the right bank account. In most cases, there’s no need to work with a foreign bank or use an in-country account. Instead, opt for the convenience and control of a multicurrency account. Many U.S. banks offer these sophisticated virtual accounts, which let you transact in a foreign currency without the hassle of opening an account in another country. Other advantages include English-language reporting and potential integration with your current banking portal and domestic accounts.
- Avoid unnecessary currency conversion. When you use your multicurrency account for both your payables and your receivables, you can maximize your efficiency and boost your profitability. For example, when accepting payments in euros, instead of immediately converting those funds into U.S. dollars, hold your euros in a euro account. Then, when it’s time to pay euros to your foreign suppliers, use the euros in your multicurrency account to make the local currency payments.
- Lock in your FX rates up front. A foreign exchange forward contract with your bank takes away the uncertainty and risk associated with constantly changing currency values. With it, you can protect your funds for weeks or months, depending on your needs. A forward contract works well for supplier payments, such as securing your venue and paying for food and beverages, or receivables from attendee registrations. It also makes it possible for you to forecast your budget more accurately.
- Make it easy for attendees to pay electronically. If your advertised price is 250 euros, your attendees will expect to pay exactly that — not €249.50 or €252.35, plus currency conversion fees. Likewise, few attendees want to look up the day’s exchange rate and translate your price from U.S. dollars to the local currency. Setting up international merchant services will enable you to accept credit and debit card payments in local currencies, then settle those funds in either U.S. dollars or a foreign currency.
- Order banknotes before you travel. Finally, support your business travelers and onsite event staff with cash for tips, taxis, and other incidentals. Before you leave the U.S., contact your bank and place an order for your company. Some banks will deliver foreign currency banknotes directly to your office overnight, which saves you a trip to the bank and provides more oversight on conversion fees.
Implementing these payment services will establish a successful foundation for your international event. Attention to even the smallest financial details ensures your attendees, your suppliers, and your corporate stakeholders have the best possible experience.
1. Cvent, “Top Europe Middle East Africa Destinations 2016” and “Top 25 Asia Pacific Destinations 2016.”