How a currency specialist could help businesses save money on international transfers


Guest article | By Matthew Andrews, B2B Currency Expert at Currencies Direct

While the degree of exposure will vary from one industry to another, in a globalised economy such as ours, it’s inevitable that most businesses will be vulnerable in some way to the machinations of the forex market.

In recent years the forex market has grown increasingly volatile, with the Covid pandemic, Brexit and the war in Eastern Europe driving dramatic swings.

Understanding the forex market and availing yourself of your currency options can help you better manage cash flow and budget effectively.

Understanding FX and what moves currency markets

At its base, foreign exchange – or forex – is the exchanging of one currency for another, such as when trading pound Sterling into euros in order to pay your European suppliers.

The two currencies used in a transaction are referred to as a ‘currency pairing’ and the value of the transaction will be determined by a pairing’s exchange rate.

For instance, a GBP/EUR exchange rate of 1.10 will result in you receiving €1.10 for each pound you trade.

Of course these exchange rates don’t remain static and there are numerous things that can impact rates, with economic data and geopolitical developments being major catalysts for movement in a country’s currency.

This can lead to large swings in movements from one week to the next, resulting in the foreign exchange market being seen as one of the most volatile trading platforms in the world.

It’s also important to note that what is quoted as the exchange rate between a pairing generally refers to the interbank exchange rate, which is the rate offered only to banks and large financial firms.

SME’s are instead left at the mercy of business exchange rates, which can vary from one institution to another, with most high street banks even including additional charges on each transfer made.

To this end it is important to choose the service which can offer you the most competitive exchange rate, and therefore save money when making an international transfer.

Even businesses that don’t operate internationally may find they are exposed to currency fluctuations, with prices for domestic products potentially being altered due to changing input costs.

Currency specialists vs. high street banks

Maybe you are exporting or importing goods or you need to pay employees located abroad. In either case you are likely to be regularly transferring a significant amount of money into another currency. Choosing the right currency partner could net you savings of hundreds or even thousands of pounds.

Generally speaking, a currency specialist will be able to offer you more competitive foreign exchange rates than high street banks, which means your money retains as much of its value as possible as it is transferred into your desired currency. Using a currency specialist also allows you to avoid the transfer fees levied on your transfers by most banks.

This transfer fee is added to each trade, so if you are making regular transactions, like transferring money to settle invoices or repatriate foreign profits, you may find using a bank becomes cost prohibitive.

Most currency specialists will not charge you this fee, so you can expect to see savings on your transfers right away.

Taking advantage of extra services

The Covid pandemic, Brexit and Russia’s invasion of Ukraine have infused considerable volatility in the value of the pound and have caused it to hit multi-month lows against many of its peers. This can put increased pressure on large money transfers as a decrease in an exchange rate by just a few pennies could potentially cost your business thousands. 

Currency specialists offer a range of services to help your business protect its profit margins when transferring funds. One such service is the forward contract, allowing you to fix an exchange rate.

For example, if you order goods from an overseas supplier, when you come to settle the invoice at a later date the value of the pound may have fallen, meaning your order will cost more than initially expected.

Alternatively, if you are planning a future transfer and have time to hold out for a more favourable exchange rate, you can set up a limit order.

This will allow you to set a desired exchange rate for your transfer and will automatically be carried out upon it reaching that point, limiting the admin required from having to watch the markets yourself or missing out on the transfer you want because the exchange rate drops again before you can move on it.

When using a bank to transfer your money, you will generally only be able to trade at the current exchange rate for the day in question, narrowing your chances of getting the best possible deal for your situation.

So whether you need to pay a single invoice or are building a global business, having the right partner to minimise cost and maximize opportunity is essential.

To discuss your business’s currency requirements, or any cash flow challenges your business may be facing, contact Hilton-Baird Financial Solutions by calling 0800 9774833 or requesting a call back at a convenient time.

About Currencies Direct

Since 1996 Currencies Direct has helped more than 325,000 customers with their currency transfers and hold an excellent five-star rating on Trustpilot.


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