If you’re here because you're interested in finding out about financial translation or you have an important document to translate, you've come to the right place. We're going to tell you about the challenges involved with these types of translation, as well as point out the most common mistakes. We’ll give you our conclusion now: it is highly advisable to use the services of an experienced professional to get an accurate financial translation, as this will spare your business a lot of headache.
What is financial translation?
You could say there are four categories of translation: literary, commercial, specialised and sworn. Within these classifications, financial translation is a specialised discipline in the field of economics and finance. Financial translation has its particular concepts and vocabulary, requiring specific knowledge.
Financial translations are becoming more and more necessary
The demand for financial translations is increasing because of globalisation. Also, it’s not limited to large multinationals. Nowadays, it’s common for a Spanish SME (Small and Medium Enterprise) to sell its products in China, South Africa or India. In this scenario, it will be necessary to draw up contracts which each party can understand correctly in their language.
Mergers and acquisitions are also driving the increased demand for financial translations. For example, if a German start-up is thinking about buying a competitor in the United States, it helps to have all of the financial information translated into German to make the right decision.
These two examples represent a tiny fraction of the massive demand for financial translation. Institutional communications or financial disclosures, audit reports, contracts, insurances or prospectuses for investors are some of the many documents which require specialised translation.
The main challenges of financial translation
Mathematics is universal, and, since financial documents are based on numbers, translating them should be very easy, shouldn’t it?
Well, the opposite is the case. Financial translation is almost like an art form and requires the experience of a professional because there are many challenges to overcome:
- Financial rules differ by country. In the European Union, legislators have harmonised financial and accounting regulations through the application of standards called IFRS (International Financial Reporting Standards). But these standards are used mostly by large companies and rarely by SMEs. Moreover, other regulations prevail outside of Europe, such as the United States GAAP (Generally Accepted Accounting Principles) system. Each regulation has its nuances. A good translator should know the differences.
- In the same language, a financial term can mean one thing in one country and another in a different country. In English, the word stocks can refer to both reserves of goods or components and also shares in the company’s capital, depending on the geographical area where the person is.
- Since translation provides some leeway for using a word or a synonym in the target language, it is essential that there is consistency in the terminology used. Otherwise the reader could become confused if he is unable to recognise concepts between one document and another. The best solution is to always work with the same translator or, if this is not possible, to have a terminology database (Termbase) available.
- Regulations are continually evolving, and the financial translator has to keep up-to-date so that he/she can always produce a correct and accurate financial translation.
- Financial documents are almost always highly confidential. This is not a translation issue per se, but it makes it highly advisable for the company to hire a translator who applies the rules on confidentiality and who acts per the company’s professional ethics.
- Deadlines. When a company is put up for sale, data is usually collected to create a data room. If the seller is in a hurry, a foreign buyer may need a large amount of information to be translated within a short period. Each document must be correctly translated so that there are no mistakes in the valuation of the purchase. In such circumstances, it is essential to be able to rely on an efficient translation service. The same thing happens when companies have to disclose their results on specific dates. They cannot afford delays due to translation, or misinterpretations.
The most common errors in financial translations:
- Simplifying too much or misinterpreting a subtle nuance in meaning. In 2005, the incorrect translation of a Chinese article on the national currency (the Yuan) caused momentary panic on the financial markets and a fall in the dollar. In 2012, a poorly-translated nuance in meaning in a quarterly report from the Japanese company Sharp resulted in the company losing 10% of its value on the stock market, before recovering in the following days.
- Errors in the numbers. In English-speaking countries, decimals are usually separated by a full stop and thousands by commas. In many other countries, the opposite is the case. Transcribing a number without recognising this difference could lead to very significant errors.
- Not taking account of cultural aspects. In Europe, a balance sheet starts with the long-term assets and liabilities, and finishes with the short-term ones, while in the United States the concepts are arranged in the opposite direction. Even if you translate the terms correctly, stating them without changing the order will produce a strange result for the reader.
Characteristics of an excellent financial translation:
- It is done by a specialist in finance, who understands the concepts he or she is translating. The financial sector is so large that often the translator will specialise in a particular sector or a type of documentation.
- To ensure that the result is consistent, another professional can scrutinise the translation, particularly for the most important documents. For this reason, it’s helpful to allow for a proofreading phase in the process.
- A good translator is unassuming. If he has a question, he consults with his colleagues. An arbitrary decision could be right, but it could also result in a translation error.
- The best translators have a lot of experience, which translates into expert knowledge of financial language.
- To ensure consistency between different documents, a good financial translator always uses the same terms for the same concepts. The use of a translation platform such as LanguageWire makes it easier to stay consistent, alongside helping the translator work more efficiently and improving translation quality.
- Finally, a professional in financial translation must continually update his or her knowledge to stay in touch with regulatory developments and innovations in the sector.
So that’s financial translation
As you know, when dealing with numbers, details matter. A comma in the wrong place or one more zero changes everything. The same goes for financial translation. A subtle difference in meaning can have a significant impact on business. Don’t take any chances.