Invoicing Billing in Desired Currency
1 IS an ideal method of hid in( foreign exchange ask , Mogul in one currency enables the firm to know the precise amount It ).< Indy to receive from sales (exports) and likewise the exact mount it is to ray for purchases (imports). As a foreign exchange risk is completely eliminate rued
Although the method provides a natural hedge, it may not he operationally feasible to he used always and ht all firms, Only fins high demand for their products, across the world, and those having products with’ low price-elasticity, say petroleum products with low competition with less substitutes available, may be in a strong position with their counterpart to make them agree to receive pay in their own home currency. This implies that the company should he in a very strong position to impose tilling, either in it, own domestic currency or currency of its choice, on the other party. In the current business world of globalization, the number of. such firms is decreasing. In fact.
the vast majority of companies have to encounter competition on any fronts and, hence, it is likely to be a very daunting task for them to force the counter party ·to have hulling 10 the currency of heir choice. In sum, relatively few firms may enjoy ‘hedge luxury’ of this SOU