Spending more than necessary on money transfersAs a starting point, ask yourself the basic question: am I sure Im getting the best rate of exchange If you are using a high street bank to handle your money transfers, be prepared to pay hefty markups away from the real exchange rate. Unless you are a large corporate transacting many millions each year, you could be paying around two to four per cent of the value of your transfer. In real money terms, this is a cost of up to 4,000 on every 100,000 you transfer. Not great for the bottom line. You can reduce these costs by trading with an FCA authorized and regulated foreign exchange specialist. Typically, currency brokers are buying currency in bulk and from the live market, as opposed to banks who set their rates just once per day. This means they can offer you rates much closer to the interbank exchange rate. As a benchmark, look at specialists who will apply markups inside of one per cent away from the market rate on business foreign exchange transactions. For more about buying live currencies try XE.com for up to date foreign exchange information.
Ignore zero per cent commission offersWould you offer your business services for free, every day Neither would the banks or opaque money transfer companies offering zero per cent commission deals. They need to make a profit too and offers of zero per cent commission only serve to dupe you into thinking you are getting a free money transfer. Whilst many companies claim they offer a commission free transaction, they will actually apply markups to the exchange rate to their advantage. Transaction fees are the charges you can see – it’s the most visible type of fee. Profit built into the exchange rates on the other hand is not overly obvious to work out. Unless you have a good understanding of the inner workings of the interbank exchange rate, you might not ever know the exact cost of your international payment. As a top tip, always compare the sell rate you are offered with the real rate you find on a reliable currency converter.
Paying fees to receive money transfersIt seems hard to comprehend, but many banks, particularly in the Eurozone, will charge you to receive a money transfer from an external source. Spanish banks are the main offenders here. These charges are harder to avoid, but you might want to review your business account small print to see if you will be affected by an incoming money transfer or switch bank accounts if you have paid these charges in the past.
A poorly timed transfer due to poor transfer adviceWhen you use your bank to carry out an international money transfer, you are less likely to receive a proactive service. More often than not, they will simply process your transfer, pocket the fee and move to the next customer. A currency broker on the other hand will be able to watch the markets on your behalf. They will be able to spot the market fluctuations as they happen and give you informed and beneficial guidance on the best time to transfer. Consider the use of a forward contract, limit order and stop loss. These contracts are designed to help you trade at the right time, and give your business the ability to budget effectively. For general housekeeping, all businesses, regardless of size, should review their money transfer strategy at least once a year to ensure they are getting the best service and access to competitive rates. On each and every transfer, try to get multiple quotes and haggle your way to a fairer and cheaper deal on currency. Aviva Tabachnik is Partnerships Executive at OPP award winning comparison website, MyCurrencyTransfer.com. Image source
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