Why use a foreign exchange company?
International payments are a big part of many businesses, particularly those who export goods or rely on overseas producers.
Many of these businesses deal with payments in multiple currencies everyday and often rely on the banks to manage these transactions for them. There is an assumption that the banks are the ones best poised to do this and also the most trustworthy.
The majority of banks, however, take a much larger margin on any currency exchange and add in hidden charges. For businesses who have been using their banks for a longer period of time, they may not even check the exchange rate before requesting the transaction. If individuals were to check how the rate their bank is offering them compared to that of a specialised foreign exchange company they would see that the currency brokers are able to offer far better exchange rates. The reason behind this is very simple, brokers are able to buy currency at the same rate as the banks and, due to their much lower running costs, can offer far better exchange rates.
Essentially foreign exchange experts can act as an alternative for those who no longer want to be overcharged by their banks on transactions they make as part of the day to day running of their business. On average the banks charge between 3% and 6% on each trade. A paper from the European Central Bank, published in 2019, claims that banks across Europe earn hundreds of millions every year by overcharging corporate customers on their foreign exchange.It is therefore within a business’ interest to find a reliable foreign exchange company who can save them money compared to the banks.
Which FX company is best for my business?
It is not only through one-off transactions where a foreign exchange broker can save you money but also in the long-term. The decision to use a foreign exchange specialist to manage your international payments rather than your bank is therefore an easy one, but with so many FX companies out there, choosing the right one to match the needs of your business may seem a more daunting task.
It may be tempting to go straight to the company offering the best exchange rate but when making a decision on which broker is best positioned to support your business there are three important elements to consider, quality of service, experience, and expertise.
In terms of quality of service this is of course difficult to judge before you have experienced working with a business firsthand, however in the ever changing world of FX you need to choose one that will take the time to understand the needs of your business and who can offer you a personalised service to match your specific requirements. A company that only deal online is good when everything is running smoothly, but can be very frustrating if something does go wrong and there is no one contactable via the phone to deal with any queries or problems. We at Currency//UK for example assign a dedicated account manager to each client as well as having a payments and compliance team all contactable via the phone.
Having an experienced currency broker in place is crucial to ensure that your business is not caught out by volatility in the currency market. A good broker will be able to help you implement relevant processes into your business’ operations to make sure you are ready in the event that the rate moves against you.
Many businesses proclaim to be currency experts and sieving through those that are genuine and those who are looking to make a quick fortune can be difficult. To make things easier on this front you should choose a broker who has the technology in place to deliver a reliable and high-quality international payments solution. Currency UK for example offers products that automatically execute trades if certain predetermined conditions have been reached. We are also able to guarantee a rate for a future date allowing you to take advantage of a favourable rate and lock in bottom line profits.
If you would like to find out more about how you can save money on your international transactions, mitigate the risk of your profits being threatened by currency fluctuations and have a designated currency specialist working to get your business the best rates then call us today on +44(0)20 7738 0777 or click here to open a business account with us.
Posted in Business Resources on Sep 12 2019