Exchange Rates and International Travel

Our youth group used to collect newspapers, cans, and bottles for recycling when I was a kid.  We used the money to help pay for trips, etc.  On collection day, my friend Andy and I would volunteer to help unload the stuff from the donators and load it into the truck.  We used to check the bottles as we loaded them, because some of them were worth a bit more than the others when you would return them to collect their deposits.  In those days, Pepsi bottle was worth five cents, but some root beer bottles were worth six cents, etc.  There was one particular beer bottle that was worth a dime!  I never understood how those same sized bottles could vary so much in value.

I think the same thing about international exchange rates when I travel out of the country.  Sure, I know the rate will fluctuate a tiny bit every day, but wouldn't you think that there would be a single source of that information that all of the banks, hotels, and other business would use to do their business?  It's not so!  At the end of one business day while in London, I looked at my receipts and counted no less than five different exchange rates that were forced upon me as I ate meals, etc.  "How on earth," I inquired to myself, "Am I going to account for all of this on my expense report?"

If you don't have a meticulous manager or auditor who insists that you use the official internationally established exchange rate, broken down and accounted for on each day of your trip, then you're lucky.  I had a manager ask me to do that once, and when it all boiled out of the kettle, I ended up spending an extra hour of time to re-do each day of my expense report and I saved the company a whopping $1.37 overall.

What I do now is collect exchange rates!  Any receipt or printed notification from my hotel, a bank, internationally accepted source from the internet, etc, I copy it and I keep it.  Eventually when I get home and settle in to do my expense report, I'll pull out all of the referenced exchange rates, and I'll simply use the one that is best for me.  For example, let's say that I stay in a hotel in London and I spend 1,000 British Pounds for the week.  If the exchange rate was 1.5 dollars for every 1 pound, then I would have spent $1,500 to stay there in U.S. Dollars.  If the exchange rate was 1.48, then I would have spent $1,480.  If I were to use the exchange rate of 1.5 when I do the expense report, I'd get reimbursed $20 more than if I'd use the other one.

Be sure to consult your travel policies, of course.  No matter how many bottles Andy and I found, we weren't allowed to keep them at the end of the day.  We still had to turn them in.  Most companies have a policy that will certainly govern the willy-nilly use any random exchange rate, but if you can produce proof that your hotel used a rate that differed from the international rate at the time (it happens all the time), then you'll certainly want your money back!

EXTRA: If you have questions for Ken regarding business travel, hotels, airplanes, etc, please send an email!  Your questions will be recorded and Ken will answer the best ones in his Ask the Expert podcast show.