In 2020, the US traded $559.2 billion worth of goods (two way) with China. More large corporations and small businesses now import and export goods and services to foreign countries.
Have you ever wondered how these companies keep multinational partners in the loop while working with massive sums of money despite the language barrier? The answer is financial translation.
Understandably, the rise in international business relationships has led to increased demand for financial translation services. But this kind of translation poses unique challenges and demands a high level of skill and attention from translators.
If your company uses or will soon need financial translation services, you probably have some questions. How does financial translation work? How can you mitigate the usual challenges involved, reduce the potential for error, and arrive at accurately translated documents? We’ll help you figure out the answers you need to make financial translation a success.
What is financial translation?
Financial translation is the rendering of financial documents—including but not limited to cash flow statements, prospectuses, account audit reports, and balance sheets—to a different language. These translations could be done for financial institutions like banks or other large corporations and businesses but are always translated to the language of the other party in a transaction (also known as the target language).
The translation of financial documents ensures that all multilingual stakeholders in large corporations can stay up to date with financial records without the language barrier. Financial translation also comes in handy during international mergers, acquisitions, and other business transactions. All parties involved can understand the fine print and keep up with the relevant reports.
Examples of financial translation in key industries
Because the financial sector is quite broad, this kind of translation involves work in related industries like insurance, real estate, and manufacturing. So financial translators often have to work on insurance documents for insurance companies, expense reports for manufacturing companies, and income statements for real estate procedures, for example.
Here are some other examples of financial documents that may be translated across key industries:
- Large corporations: Annual reports, balance sheets, shareholder reports
- Tax and accounting: Invoices, tax reports, income statements, tax clearance documents
- Insurance: Financial reports, terms and conditions, insurance policies, regulatory documents
- Real estate: Income statements, real estate listings, contracts
- Investment: Documents reporting mutual funds, bonds, prospectuses, equities
As you can see, financial translation is a highly valued process. Let’s now consider a few challenges encountered when translating financial documents so that you’re prepared when you begin the process.
5 top challenges of financial translation
Both translators and stakeholders face many obstacles while navigating financial translation. When rendering financial information in a different language, nuances can be lost, and confusing foreign terminology can be introduced. Then, there’s always the risk of human error in translation.
In addition to these issues, here are 5 of the most common challenges:
Local regulations
Like with all types of translation, the local culture and regulations play a significant role in financial translation. Translation usually demands a level of localization, which involves translating not the individual words but the entire reading experience. It’s important to consider all of the customs and commonly used words and their meaning, often used in similar types of transactions.
As translators work, they will often need to consider significant differences in currency, units, and variations in formatting and financial terms. For example, where UK financial statements would read “Creditors,” US statements would read “Accounts Payable.” Similarly, for non-English speaking countries, direct transliterations of financial terminology will likely be insufficient.
Tone of voice
Although financial translations are often largely number-based, some financial documents, such as audit reports, are usually text-based. These documents may need to be presented to global stakeholders and typically adhere to a specific tone of voice.
So when translating financial reports, translators must keep in mind the company’s desired tone of voice and ensure that it renders similarly in the target language—while keeping cultural norms in mind.
Tight deadlines
Another unique challenge for financial translation is that delivery timelines can be unpredictable. While some documents may be expected quarterly or annually, the process of document production and the multiple reviews throughout can make things challenging for translators. With several team members and stakeholders weighing in, preparation and submission deadlines can become quite tight.
Accuracy
Translating text with a significant number of figures requires meticulous care to avoid errors. Missed figures, misinterpreted phrases, and wrongfully rendered numbers often have far-reaching repercussions in financial translations.
Data security
Confidentiality is paramount when translating sensitive business information. This is especially so when it concerns income, bank account information, audit reports, insurance documents, and other private documents. If translators fail to adhere to cybersecurity best practices or use tools that do not prioritize data security, data breaches will be inevitable.
Top 3 common errors to avoid in financial translations
Errors in translation (financial or otherwise) can damage the reputations of all involved—both translators and stakeholders. So, it is essential to look out for some of the more common mistakes that occur during translation. Consider three of the most common errors translators run into while working with financial documents:
1. Inconsistent terminology: Most words in the English language have interchangeable synonyms. But when translating, using a high volume of synonyms in the initial document can create issues for the translators. It may be difficult to associate both words as meaning the same thing.
For example, while “bank statement” and “account statement” mean the same thing in English, it may be confusing for a translator if both terms are used interchangeably without warning or prior explanation. It would be best to stick to using either “bank statement” or “account statement” or have a terminology database (or use translation memories) with agreed-upon terms.
2. Number inaccuracies: It can be easy to mix up numbers after a long day of translating and staring at the screen. Regional differences in the way numbers are rendered can also make this extra challenging.
For example, most English-speaking countries separate thousands with a comma and decimals with a period. But many other countries like Germany use a period to separate thousands, and in Switzerland, an apostrophe separates the thousands. As you can imagine, that may be confusing for some translators.
3. Formatting differences: Besides the way numbers are written, basic formatting differences in financial documents can make errors more frequent. For example, bank statements and balance sheets in Europe may be formatted differently or have different categories from their American counterparts. Translators would need to be aware of this nuance to work effectively.
The 7 most important tips for excellent financial translation
Translating financial documents is no cakewalk. We’ve rounded up 7 best practices for financial translators or businesses looking for the right translation service:
1. Hire a finance expert
It’s true that what matters most in translation is the translator’s translation skills. But one thing that makes translators more successful at their job is an understanding of the subject matter.
So when you’re deciding on which translator or translation agency to hire, ask about them how they select the right translators for an assignment. Ensure that your translator has at least a basic knowledge of financial services and understands the differences between each kind of document.
2. Review the guidelines
Keep in mind what the translated document is and what it will be used for. A good translator carefully reviews client guidelines to ensure that the final product matches the required tone of voice and accurately conveys the same meaning in the target language. Whether you’re translating annual reports or other number-heavy financial documents, aim for accuracy.
3. Pay attention to regional differences
Besides client guidelines, be sure to understand the regional differences in formatting and terminology. This ensures that your translated document is easy to understand and properly localized to your global audience. If you’re looking to hire translation services, share a basic list of differences between your financial terminology and that of your target language with your translator.
4. Stay up to date with new terminology
The financial sector is always changing terminologies, whether due to new government regulations or updated financial processes. Knowing what’s changed will make you more valuable as a translator.
If you’re in the market for a translation service, hire someone with proven expertise and years of experience. These specialist translators often stay up to date with the financial industry.
5. Keep data confidential
A good translator understands the value of confidentiality and secures their translation tool to keep private financial information secure. The best translation services also work with translation software protecting your data from loss or data breaches.
6. Rely on top-notch translation services
Many translation services depend on the kinds of translators you choose. You need reliable, expert translators who deliver your work on time. Smartling works with the best of the best translators. Our translation service promises you 100% on-time delivery and quality translation. All our translators are native speakers and understand the cultural nuances as well as they know the language.
7. Use an effective translation tool
Translation services are only as good as their tools. Whether you’re a translator or a business owner in search of a translator, invest in an effective translation tool like Smartling to maximize the return on investment for your translation.
Smartling’s software offers a variety of essential translation features, including a translation management system, a computer-assisted translation (CAT) tool like no other, and powerful analytics to keep track of your translation work.
Financial translation beyond the numbers
Translating financial documents into different languages is a weighty responsibility for most translators. If you’re hiring translators, you can lighten the load by choosing a translator with financial services expertise.
More importantly, however, choose a translation software that prioritizes your target audience by creating high-quality translations. With Smartling, you can communicate directly with translators, cut down unnecessary translation fees, and have your documents ready to go on deadline.
