How the weak Euro affects freelance translators

How the weak Euro affects freelance translators

The value of the Euro has been declining steadily over the last few months. In the face of Greece’s debt crisis and the country’s NO vote on the referendum yesterday, the Euro is set to depreciate even further. There is much speculation about Greece’s bailout package and even a ‘Grexit’ (a neologism denoting Greece’s exit from the Eurozone) is on the cards, so chances are that the Euro could stay weak for a while. So what does the weak Euro actually mean for you as a freelance translator? How does it affect your freelance translation business and how can you reduce the impact of foreign exchange fluctuations?

The translation industry is – by its nature – very international. For freelance translators, invoicing and getting paid in different currencies is part and parcel of your job. And as such, you are vulnerable to fluctuations in exchange rates. Sometimes these fluctuations will work in your favour, and other times they can have a negative impact on your bottom line. As a translation agency, for example, we work with pound sterling, Euro and US dollars. Which currency we use to pay our 40+ freelance translators, depends on which of our clients they work for.

Whether you are affected by the weak Euro largely depends on where you live and in which currency you invoice your clients:

1) You live a Eurozone country and you get paid in Euro

The value of the Euro doesn’t really affect you. If you live in Germany, for example, and you work with a French client who pays you in Euro, then no currency exchange is involved.

2) You live in a Eurozone country and get paid in another currency like US dollar or pound sterling

You are benefitting from the weak Euro. This essentially means that you are getting paid more for your work. The graph below shows how the Euro has performed in comparison to the USD over the last 12 months: a year ago, $1 USD was worth €0.73 EUR, whereas today it’s worth €0.90 EUR – so you are getting paid 20 cent more per USD you earn.

USDEUR currency rate

USD EUR currency comparison over the last twelve months. Source: xe.com

 

3) You live outside of the Eurozone and get paid in Euro

You are on the unlucky side of the exchange rate coin at the moment. When you convert Euros into GBP or USD, you are getting paid less for your work.

This second graph illustrates how the Euro has performed in comparison to the British pound. Twelve months ago, €1 EUR would fetch you £0.79 GBP, whereas today it will fetch you £0.71 GBP, so you are essentially getting 8 pence less for each Euro you earn.

EUR GBP currency comparison over the last twelve months

EUR GBP currency comparison over the last twelve months. Source: xe.com

So, is there anything freelance translators can do? After all, currencies fluctuate all the time, sometimes in your favour, sometimes the opposite. Here are our top tips:

Wherever you can, try to invoice in your own currency

The biggest step towards mitigating exchange rate risks is to find domestic clients – or in the case of the Euro – clients in the Eurozone.

For international clients, this won’t always be possible because they generally have different invoicing requirements – and it can even be off-putting for prospective customers to receive a quotation in a currency that they are not that familiar with. But it certainly doesn’t hurt to ask if they’d be able to pay you in your own currency. As a general rule of thumb, if you can invoice in your own currency, then go for it.

Open a foreign currency bank account

If you live outside the Eurozone and get paid in Euro, it might be worth opening a Euro currency bank account and ‘hedging’ your Euros until the exchange rate improves. This isn’t always an option for freelancers, since they generally live from one month to the next without the ability to build up big cash reserves, but if you are able to ‘sit on your Euros’ for a few months until the exchange rate improves, then you could potentially save yourself quite a bit of cash.

Negotiate higher rates

This is a bit of a tricky subject – and a sensitive one, too. Negotiating higher rates based purely on a weak exchange rate could be seen as unfair by your clients. After all, they are getting exactly the same service but are expected to fork out more money for it. And they would probably expect you to lower the rate again once the exchange rate improves. Generally, once a rate has been agreed, customers expect that rate to remain the same, certainly for the timeframe set out in your terms and conditions. However, if you have been working with a customer for a long time, and you have never raised your rates before (e.g. to reflect the rate of inflation), then now might be a good time for it.

Keep an eye on the exchange rates

Stay abreast of international news and keep an eye on the exchange rates. If you follow what’s going on in the world, you can  learn quite a bit about which economic and political forces influence the value of money, in your own currency and the currencies you get paid in. Here at AJT, we use TorFX as our foreign exchange provider and they write a neat short blog with the most important daily currency insights, which you might find useful. If the Euro is likely to stay weak for the foreseeable future, then you might want to think about your current client base and what kind of new clients and regions you should target.

How do you manage fluctuations in the exchange rates? Share your stories with us on Twitter or Facebook.

Exporting to Europe? Know your public holidays

Exporting to Europe? Know your public holidays

Did you know that today is a public holiday in many countries around the world? 1st May is International Workers’ Day so across most of Europe, offices will be closed today.

If you are exporting to Europe or you have European suppliers, you will know how important it is to be aware of all the different public holidays. If you don’t include them into your planning, you risk delaying deliveries, lorries turning up at closed customs offices, long queues at country borders due to holiday traffic, etc.

Public holidays differ in each country and are deeply connected to the political and religious history of a country. In Germany, for example, there are some public holidays that apply to the whole country, and others that are specific to individual federal states. At the bottom of this blog, we have pulled together a table with the most important German and French public holidays in 2015.

One of the best ways to keep up to date with public holidays in other countries is to use Google Calendar and add country-specific holiday calendars. We work with German and French customers and translators on a daily basis and we tend to add a reminder one week in advance of any public holidays so we can plan ahead and minimise disruptions. Every little helps 🙂

German public holidays 2015

NameDateWhere?
Tag der Arbeit (Labour Day)01.05.2015 Whole country
Christi Himmelfahrt (Ascension)14.05.2015 Whole country
Pfingstsonntag (Whit Sunday)24.05.2015 Brandenburg only
Pfingstmontag (Whit Monday)25.05.2015 Whole country
Fronleichnam (Corpus Christi)04.06.2015 Baden-Wuerttemberg, Bavaria, Hesse, North Rhine-Westphalia, Rhineland-Palatinate, Saarland
Mariä Himmelfahrt (Assumption)15.08.2015 Bavaria, Saarland
Tag der Deutschen Einheit (Day of German Unity) 03.10.2015 Whole country
Reformationstag (Reformation Day)31.10.2015 Brandenburg, Mecklenburg-West Pomerania, Saarland, Saxony-Anhalt, Thuringia
Allerheiligen (All Saints' Day)01.11.2015 Baden-Wuerttemberg, Bavaria, North Rhine-Westphalia, Rhineland-Palatinate, Saarland
Buß- und Bettag (Day of Atonement)18.11.2015 Saxony
1. Weihnachtstag (Christmas Day)25.12.2015 Whole country
2. Weihnachtstag (Boxing Day)26.12.2015 Whole country

French public holidays 2015

NameDateWhere?
Fête du Travail (Labour Day)01.05.2015Whole country
Fête de la Victoire 1945 (WWII Victory Day)08.05.2015Whole country
Ascension catholique (Ascension Day)14.05.2015Whole country
Pentecôte (Whit Sunday)24.05.2015Whole country
Lundi de Pentecôte (Whit Monday)25.05.2015Whole country
Fête nationale (Bastille Day)14.07.2015Whole country
Assomption (Assumption of the Blessed Virgin Mary)15.08.2015Whole country
Toussaint (All Saints' Day) 01.11.2015Whole country
Armistice 1918 (Armistice Day)11.11.2015Whole country
Noël (Christmas Day)25.12.2015Whole country