In an international transaction, the choice of a billing currency is important. Why ?

International contracts are subject to currency risks as they are likely to involve different currencies, be it that of the parties or another currency they have agreed upon. The date of conclusion of the contract may not be the date of payment, which could lead to the final price being fixed at a later date. Given the volatility of the currency market, particularly in recent months, the value of the designated currency is likely to have dropped or risen in the meantime, resulting in one of the parties paying more than it had anticipated. This was highlighted in January 2015 with Swiss companies which faced important setbacks after the recent fluctuations of the Euro-Swiss Franc rate.

In this context, firms can be exposed to a diversity of currency risks. Several contractual mechanisms are at their disposal to provide them with the appropriate protection.

All the currencies are not freely convertible.  When it comes to billing international transactions, the seller is investing his receivables - a form of short term  working capital funds-  and would prefer to realize the same at the earliest to bring back into his cash flow.  As a prudent  business, the seller should necessarily denominate his billing in a currency which is easily convertible.  Hence the choice is important

Thanks for invitation,

Since not all currencies are convertible by laws, i.e. a lot of currencies can not be used outside its local countries / market ( for instance The Egyptian Pounds, Sudanese Pounds,.....etc). 

Because not all the currency is considered an international working reciprocal in all states

 

So is the use of a strong currency in order to maintain the rights of the company or the client

Yes I would think so as the strength of one currency against the other would have impact.  We should always protect against currency devaluation that could happen because of many things so I think the best and safest method of security when doing international trade is to to know the countries dynamics in terms of political, social, and other factors that could devalue that countries currency and hedge the transaction for the future.

Generally in International transaction exchange of currency is there hence its important for organisation to know actual expenses With reference to question before transaction there is predecided / selected in which currency billing will be made there are some clauses which helps to both remiitter and beneficiary eg. DTAA between countries, dealing with tax like who will bear the burden