Estimated reading time: 2 mins
You might have learned this before – ALL freelancers should use Freelancer Marketplaces (such as Elance) for ALL their work (and somewhat obviously then) buyers who use freelancers should use them too. They bring to buyers and freelancers benefits that mustn’t be scoffed at.
PROBLEM: The currency used is $USD, but what if you’re not based in the US?
The way financial markets are going with volatile exchange rates, the price you agree is not necessarily the price you receive because of foreign exchange fluctuations.
Elance has this great escrow service. This means buyers fund payments before work commences – cool stuff because they ‘buy’ the current exchange rate. Wait though. This only works if it is in your favor. When buyers eventually release the funds to you when the job is complete, then you have to take the money out through PayPal for example. The exchange rate at the time you withdraw may have changed out of your favor. Crap .
Here’s the thing too – it’s unlikely that you can afford to leave that money swilling around in your PayPal account until the exchange rates fair better. And how long until they get better?
The situation is a bit of a roulette wheel – if you knew when and by how much exchange rates were going to improve then you probably wouldn’t be an IT freelancer, but instead an international banker and cream it in that way.
So what can be done?
Well there is one thing you can do if your buyer is located in your country, and that is to agree a price with your buyer in your domestic currency and you complete the transaction at the same time (e.g. buyer pays, you withdraw) and adjust the $USD price. If your buyer is familiar with you then they should be reasonable – exchange rate volatility can work against them too.
You could try the above even with buyers outside of your country, for the same reason that an upfront agreement means that you’re both subject to fluctuations and it’s the same gamble for you both. This may effect your competitiveness in the marketplace due to the added complication, so I only suggest asking for this with buyers you have a strong track record with.
Here’s another solution. Don’t withdraw funds from PayPal in US currencies, but use it to purchase items in the US (especially electronic goods/services such as sub-contracts in Elance or software licenses) so you’re not stung by the exchange rates. This works if this isn’t your main source of income though!
You may know of other ways of dealing with these challenges – if so then please share them.