Thursday, May 27, 2010

Make Currency Fluctuations Work Your Way

It has been really long since I sat down and wrote a blog post. Well it was a combination of laziness and the absence of any good issue which really motivated me to write and entry. Well today, I got rid of the former and had a good latter which made me sit down and write. Group effort I say!

It makes me wonder as to how many new roles have I started to play since I went out working as a freelance writer. It has made me my own personal organizer, a creative thinker and at the same time a financial analyst. The first two can be related but what about the third? Well, this is where the fluctuating economic conditions come into play! No, I have not started writing articles on the global financial economy but I am gravely affected by the fluctuating currency denominations when it comes to asking for payments for my projects.

When I started out I did not bother much about it and was OK with the rate I got after the currency conversion rates. But lately with experience (and maybe the greed to get some more!) this has become a very important point for me when I quote rates for my projects. There are two currency related factors that I need to keep in mind before I go ahead and quote my price; the current currency conversion rate and, since I use PayPal for my payments therefore the fee that PayPal deducts for the payments.

Apart from INR, the other currency that I regularly deal with is the US Dollar. When the economy was hitting rock bottom it was booming times for me. Instead of the regular INR 38-43 against a Dollar, I got incredible conversion rates which went up to INR 50-51, good times I say! But since this does not happen all that frequently there comes the need to safeguard my interest. I recommend the following:

1. If you are starting out as a freelancer, you can afford to bear some of the fluctuations. After all this might result in a lower final amount that you quote to the client and make it work in your favor.

2. The other thing that I have constantly done is to leave my money in my PayPal account when the rates are too low. I have often experienced that these currency fluctuations are quite temporary and your patience might prevent you from bearing a loss. So if you can afford to leave your funds as it is for some time then this might work!

3. If you are using the services of payment gateways like PayPal then it is suggested that you go ahead and check with all the kind of accounts that they offer. You need to select the one which best fits your need as all of them have different rates which they charge.

4. The fourth and the most effective way to beat the currency punches is to go ahead and increase your rates. You need to convince your clients that the final quoted rate allows you to cushion your loss as well as justifies the efforts needed in the project too.

But what to do if you are getting into a long term contract?
I suggest that if you are getting into a contract with your client then you can go ahead and suggest adding a clause to it that the price will be reviewed after say a period of 5 months and based on the currency conversion rate at that point consequent changed would be made to the price. This will not only cushion your cause but at the same time put you forward as a good professional too.

Currency can surely be tricky but it is very important that you manage your finances well and charge an amount which is not only justifiable but at the same time allows you to make a decent profit too.