Dollar-denominated invoice, IOF, and currency reconciliation: the real cost of paying for the cloud with a corporate card
Every month it’s the same routine at many companies: the invoice from AWS, Google Cloud, or Azure arrives in dollars, hits the corporate card, and the finance team starts a process that seems simple but costs more and consumes more time than most companies realize.
What really happens when the cloud is paid with a card?
The invoice arrives in dollars, and the card operator applies its own exchange rate at the time of the charge, often different from the rate the finance team projected in the budget. On top of that, the IOF tax on international transactions applies, an additional cost that doesn’t appear in the advertised price of the cloud service.
Then comes the reconciliation. Without a Brazilian invoice, the accounts payable team has to deal with documents in another language, a different currency, and accountability processes that don’t follow the standard of the company’s other domestic suppliers.
The impact on the credit limit and cash flow
Each cloud invoice paid with the corporate card commits part of the available limit, which could be used for other operational expenses of the company. Since cloud consumption tends to grow along with the business, this commitment of the limit also grows, creating recurring friction with the finance team.
In addition, the credit card doesn’t offer the payment-term flexibility that other payment models offer, which reduces the predictability of the company’s cash flow with respect to this specific expense.
The exchange rate disappears in the middle of the bill
Few companies stop to calculate how much the exchange rate applied by the card operator, added to the IOF, represents relative to the total value of the cloud invoice over a year. This amount, which seems small month by month, accumulates significantly in the annual technology budget.
Is there an alternative?
Paying for the cloud via bank slip (boleto), in reais, with a Brazilian invoice issued by an official distributor, eliminates the currency conversion done by the card operator, the additional IOF on the transaction, and the reconciliation process without a domestic tax document. The exchange rate used is the same that would be applied on the card, with no additional spread, and the company also gains a longer payment term than what usually exists with a card invoice.
What changes for the finance team?
Instead of dealing with an international invoice every month, the finance team starts receiving a bank slip in reais, like any other domestic supplier, with an invoice for direct accounting, without needing to nationalize a document or manually convert currency at the accounting close.
CloudDog enables the payment of AWS, Google Cloud, and Microsoft Azure via bank slip (boleto), in partnership with Ingram Micro, the official distributor of these clouds in Brazil. Get to know our Cloud Payment via Boleto service and simplify your company’s cloud payment.
