What special considerations enter the credit granting decision when the customer is paying in a foreign currency?
Granting credit delays the date on which a company receives payment for its goods or services. When payment is in a foreign currency, several things might happen during that time to reduce the value of the receipt. The foreign currency might depreciate, or local laws might change requiring that the transaction be at a special (and unfavorable) exchange rate or making it difficult or impossible to obtain payment. If any of these concerns exist, the selling company might elect not to grant credit, to grant credit only for a short period of time, or to insist that the sale be denominated in a stronger and safer currency.