How to Implement a Flexible Foreign Currency Commission Strategy

1. Open a foreign exchange currency converter account. These accounts operate on the Forex market, and allow you to change payments from American dollars to virtually any Forex traded currency. Unlike currency conversion through banks, currency converter accounts allow you to automate payments that need to be converted to a different currency on a regular schedule. These services, such as Currencies Direct, allow you to set up your account online for a fee.
2. Review your commission strategy for U.S. dollar accounts. Ask yourself if there is anything about that strategy that would make it unrealistic to implement in a foreign exchange commission strategy. Suppose, for example, you had a policy of paying your employees $500 a week, plus $50 per sale up to $10,000, and 30 percent of revenue for sales over $10,000. The sales goal is $2000 a week. This plan might be realistic for your American workers, as the ambitious 30 percent cut could be more than justified on the disproportionate sales. However, implementing this principle to a flexible foreign currency commission strategy where U.S. dollar payments are adjusted for exchange rates, might not be as wise. Imagine a week where the Euro increases 200 percent against the dollar, and your Swedish salesman makes $50,000 in sales! This is highly unlikely, but still not something any business should risk.
3. Determine the level of 'flexibility' your commission strategy will allow. As previously stated, complete flexibility (i.e., adjusting payments so that your foreign workers get the same purchasing power per paycheck as your American workers) could bring quite a financial burden onto your business. Your foreign currency strategy should have limits, so that expenses incurred from currency fluctuations cannot increase indefinitely. Speak with a financial adviser if you are unsure of how much risk you can afford to take.
4. Determine which currencies your commission strategy will apply to. Currencies that show a long term record of gains against the dollar, might not be good candidates for inclusion in a flexible foreign currency commission strategy.
5. Inform your payroll department that they are responsible for making payments to foreign employees with adjustments for currency fluctuation. This might sound like a difficult task, but once the employees have access to the currency converter account, they will be able to make the adjustment using the conversion feature.