International payments can be confusing for SMEs and is not always top of mind for business owners. An effective foreign exchange strategy can help to streamline your global payments and result in savings to your bottom line.
So, whether your business is an importer making international supplier payments or an exporter collecting funds from overseas, here are four questions to ask your international payments provider before making your next transfer.
1. How competitive is my exchange rate?
Some institutions will promote the fact that they charge no fees, but what all businesses should be looking at is what exchange rate they actually achieve on their transfer. The difference between the rate your currency is bought for and your final customer exchange rate is called your pricing, margin or spread.
A simple way of checking the competitiveness of your rate is to look at the live exchange rate on Google and then compare this with the rate you’ve been quoted. If there is more than a 0.60% difference between the live rate and the rate you’ve been quoted, you could be paying too much for your international money transfers. Banks can charge between 4%-7% on major currencies.
2. How transparent is my pricing?
Never be afraid to ask what margin you are being charged and whether this pricing will change for each payment your make. It’s a good sign when businesses display margins and customer exchange rates on their website.
WorldFirst provides transparent pricing 0.60% or less based on your estimated annual transfer volume and charges no fees on cross-currency exchanges.
3. Can I open local currency accounts in foreign markets?
Is your business exporting products or services to foreign markets? If so, the ability to access locally-based currency accounts can turn your global payments into local payments.
WorldFirst gives SMEs access to local bank account details in ten currencies for free. This means businesses can collect funds in local currency, hold them and make same-currency payments direct from their account. This is popular for businesses collecting overseas sales revenue such as consultants, marketing and media agencies, eCommerce businesses, SaaS companies, tourism operators and technology start-ups.
4. What level of service should I expect?
When assessing the service levels of an international payments business or bank, you should look at their online capability and ask if you receive a dedicated account manager.
WorldFirst business clients can make transfers online 24/7 and receive service from a dedicated Australian-based relationship manager. This means they can be contacted by phone or email directly if required.
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There’s never been a more important time to start saving on your international payments with WorldFirst. Enjoy market-leading exchange rates, award winning service and access local currency accounts for your business quickly and for free.
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Disclaimer:
These comments are the views and opinions of the author and should not be construed as advice. You should act using your own information and judgement.
Whilst information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed.
All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice.
Please consider FX derivatives are high risk, provide volatile returns and do not guarantee profits.