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Situation
An intellectual property law firm uses an accrual based accounting method; the firm waits to receive payment from its client prior to paying its foreign associates. The firm's accounting staff bills its clients the AUD equivalent of its foreign currency invoices from the firm's foreign associates upon receipt. However by the time the firm receives payment from its clients on the invoice, often more than 3 months later, the exchange rates have fluctuated. If the fluctuation results in a loss, the firm has to either absorb the loss or re-bill the client for the difference. |
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Solution
Ruesch offers Future Payments for IP professionals to let them lock in rates of exchange for up to 180 days in advance. When an invoice is received from a foreign associate, firms can lock in a rate of exchange for the invoice and bill their client the exact AUD amount. When the firm receives payment from its client, they can apply the funds to settle its Future Payment order with Ruesch, and pay its foreign associate. |
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Outcome
By using Future Payments the firm has eliminated the need for re-billing and increased its profitability by not having to write off losses due to fluctuations in the AUD. Even with three month billing cycles and slow paying clients, the firm can rest assured that it has a fixed rate for 180 days. The firm has since expanded its international patent prosecution practice with less concern that doing so would be unprofitable for the firm. |
