| 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 U.S. dollar 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 U.S. dollar 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 U.S. dollar. 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. |
