Buying stock in foreign currencies can save costs and find better-quality materials. It can also access materials that are not available locally. This benefits businesses in construction, fabrication, and engineering. But it comes with its challenges. If mishandled, fluctuating exchange rates, tax compliance, and complex calculations can hurt your profits.
Why Buying Stock in Foreign Currency Matters
International sourcing is on the rise.
PwC reports that businesses are seeking global markets to cut costs and boost supply chain resilience. However, poor management of currency fluctuations can erode any potential savings.
In highly competitive industries, a small error can mean the difference between profit and loss for businesses. That's why it's important to be conscious when buying stock in foreign currencies.
Avoid Common Mistakes When Buying in Foreign Currencies
1. Manual Currency Conversions
Many businesses use spreadsheets to calculate costs when buying stock in foreign currencies, but this approach is risky. Spreadsheets can’t handle live exchange rates, leaving you with outdated or static data.
For example, if you buy a product for USD 2.00 and the exchange rate shifts from 67 cents yesterday to 65 cents today, that small difference can eat into your profits, especially when buying in bulk.
Pro Tip: WorkGuru converts foreign currency purchases into your base currency using live or pre-set rates. So, you don’t need to worry about guessing or doing the math yourself.
2. Currency Fluctuating Exchange Rates
Fluctuating exchange rates can quickly eat into your profits. It might not seem like a big deal for small purchases, but when you’re buying large volumes or high-value items, those little changes can make a huge difference.
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study by McKinsey highlights the need for proactive strategies to manage exchange rate volatility. Successful businesses often rely on clear pricing frameworks and effective cost management to navigate these challenges. This is particularly important in industries like construction and fabrication, where pricing is often fixed for extended periods, leaving little flexibility to absorb fluctuations.
Pro Tip: Add a buffer to your pricing to protect your margins. For instance, if you aim for a 35% margin, price your products with a 40% margin to cover potential exchange rate changes.
3. Improper Tax Handling
When importing goods, businesses must navigate complex tax laws, including VAT, GST, and customs duties. Some items on an invoice may be taxed,, while others aren’t. If you handle these taxes poorly, it can increase costs or cause compliance problems.
Pro Tip: Exclude reclaimable taxes, such as GST, from your landed costs. WorkGuru facilitates this by separating taxable and non-taxable items during the purchasing process.
How WorkGuru Simplifies Multicurrency Purchases
WorkGuru eliminates the complexity of buying stock in foreign currencies. The tools available to simplify the entire process are:
1. Live Currency Conversion
WorkGuru tracks live exchange rates. It ensures accurate conversions from your supplier’s currency to your base currency (e.g., AUD, NZD, GBP). This eliminates the need for external tools or manual calculations.
Example: If your supplier invoices you in USD, the software will convert all figures into your base currency, and keep the original invoice data intact for reference.
2. Pre-Purchased Currency Rates
WorkGuru supports businesses that pre-purchase currency at fixed rates to stabilise costs when buying stock in foreign currencies. This approach protects against exchange rate fluctuations and ensures consistent pricing.
3. Integrated Tax Tracking
WorkGuru tracks all tax-related expenses. It helps businesses identify which costs they can reclaim and which they cannot. This is particularly crucial when dealing with mixed invoices where some items may be tax-exempt.
Simplify International Purchases with WorkGuru
Managing foreign currency purchases doesn’t have to be complicated. For construction, fabrication and manufacturing businesses, buying stock in foreign currencies, tools like WorkGuru make tracking exchange rates easy, automate tax handling, and streamline your purchasing process.
Practical Tips for Better Currency Management
- Automate currency conversions and tax tracking to minimise errors.
- Stay informed about exchange rate trends with reliable platforms.
- Use a system like WorkGuru to automate conversions, track taxes, and keep your records accurate and up-to-date. It must support multiple currencies.
Managing foreign currency purchases doesn’t have to be overwhelming. These steps improve financial accuracy and provide a clearer view of your costs. They help you make better pricing and budgeting decisions.
Tired of useless free trials that don't deliver? Get your free WorkGuru trial and simplify your foreign currency purchases.
