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Why is it so important to translate financial statements?

translation of financial statements - Eurotrad

In today's global market, companies striving for competitiveness must standardise financial statements prepared based on their origin country's regulations. This necessity has significantly increased with the growing demand for translated financial statements and official documents. These translations make the company's status understandable and provide clear information to attract foreign investors and conquer new markets.

Why are Financial Statement Translations Important for Companies?

Financial statements are annual documents that include information about the balance sheet, income statement, cash flow statement, and explanatory notes with the directors' report. They offer a comprehensive and contextualised overview of the company's situation.
The purpose is to present an accurate representation of the achieved economic results, along with the valuation and composition of the company's assets, portraying the company's situation faithfully, clearly, and correctly.
It is evident that the translation of financial statements for companies who need them must be flawless. Financial statement translation services should utilise precise and up-to-date vocabulary while adopting the numerical formats used in the target language.

It is evident that the translation of financial statements for companies who need them must be flawless. Financial statement translation services should utilise precise and up-to-date vocabulary while adopting the numerical formats used in the target language.
But who benefits from timely and impeccable financial statement translations? They are required by internationally operating companies that need to comply with European accounting rules. According to EC Regulation 1606/2002 of the European Parliament, the following types of legal entities are obliged to translate financial statements to comply with national standards:

  • Companies listed on stock exchanges
  • Companies issuing widespread financial instruments
  • Banks and financial brokers subject to supervision
  • Companies preparing consolidated financial statements

Skills of a Financial Translator

A financial translator is a professional specialised in translating documents and content within the financial sector. The skills required by professional translators of financial statements go beyond simple bilingualism. It requires a solid understanding of financial concepts and industry-specific terminology. Proficiency in terms such as financial statements, income statements, cash flows, current liabilities, and equity is paramount. Additionally, staying up-to-date with accounting and financial regulations in both the source and target countries is crucial as these can impact the translation of financial documents.
Attention to detail is another vital skill as even a small error in financial statement translations can have severe consequences for companies.

Why Rely on a Translation Agency?

Entrusting financial translation services to a specialised agency offers numerous advantages over freelance translators or machine translation software. Translation agencies, such as Eurotrad, maintain a large team of translators specialising in various fields and languages. They include experts with extensive knowledge of the financial domain, ensuring high-quality and accurate translations.  Moreover, translation agencies adhere to well-established quality control processes that encompass revisions and corrections, guaranteeing an error-free final product that meets professional standards.
Another advantage of working with a financial translation agency is their capability to handle large volumes of work within tight deadlines, thanks to their extensive resources. Additional services such as localisation, which not only involves translating a text but also adapting it to the cultural nuances of the target audience, are vital when translating financial statements and other financial documents. Consider the terminological differences between American and British English or the specific acronyms, dates, and figures reported in financial statements, which may vary from one country to another, even when using the same language.
Lastly, relying on a translation agency ensures confidentiality and data security, providing peace of mind when dealing with important or sensitive documents.

Redazione Eurotrad

October 2, 2023

Redazione Eurotrad

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