4th quarter patent annuity invoice reviews are largely done. So far this quarter, we’ve analyzed the equivalent of 40 million US dollars of invoices (we have EU and US clients), so we thought we’d compile and share some of our findings. Let’s take a look!
Average FX Rates Are Still High
There’s been a significant focus on currency costs over the last several years, so you would think there wouldn’t be anything to discuss here. Wrong. The FX picture is as convoluted as it has ever been. The lowest currency premium we encountered was slightly more than 2%; the highest was more than 25%. In perspective, the 2% client is paying 20k for a Million Euros or Dollars, whereas the 25% client is paying 250k for the same currencies. That’s not fun. Our clients’ average currency premium was slightly more than 10%.
Detailed Invoices Haven’t Solved the Problem
The standard approach to control currency costs has been to receive detailed invoices. The thinking is that if the vendor has to show you the details behind their calculations, currency costs will be low. This sounds great on paper, but the problem is that nobody has the time to review the data. We shocked several new clients this month when they found out their very detailed invoices contained 12% to 15% currency costs.
Law Firms are Paying Too Much
We are working with more and more law firms as they begin to monitor invoice compliance on behalf of their clients. Our sample size is small, but our data shows that some annuity vendors charge law firms substantially more for currency than corporate clients. This quarter, we saw law firms receive a number of invoices with currency premiums greater than 25%.
It Starts with the Contract
We’ll wrap things up this week with the guidance we give any law firm or company that wants to build a program to control annuity costs and monitor compliance. It starts with the contract.
Our data shows that, on average, organizations with well-defined annuity contracts with a currency cap pay 10% less than their industry peers with traditional, annuity-vendor-friendly contracts. Time to dig out that old annuity contract and begin a discussion with your vendor!
Want to check your annuity invoice currency costs?
Check out our free patent annuity self-audit tool