With so many things to consider when running a business, foreign exchange (FX) can often be overlooked despite the vast majority of SMEs buying or selling goods abroad. As we get ready to embark on 2021, and with a final decision on Brexit just around the corner, it’s important now more than ever to make sure you’re locking into your profit margin and not paying too much on your international payments.
So we’ve pulled together a few key tips that any business owner should keep in mind when handling international money transfers. While it might seem less pressing than other business matters, managing your FX costs effectively could free up cash flow and help ensure you’re in a stronger position when a EU trade deal is announced in January.
1. It’s a changing marketplace
The most important thing to remember when considering your FX costs is that the market fluctuates. It’s important to mitigate the risk of a volatile currency market to ensure you’re not left in a tricky situation, e.g. high FX costs. Fortunately we have a panel of partners who can help you do just this by offering a range of products and services to suit your needs. Contract types will vary to accommodate ongoing trades, and may include the opportunity to lock in a rate for upcoming transactions. Alternatively if you are looking to trade imminently, spot contracts could be the right option for you.
2. What’s going on in the world?
Building on the point above, the impact of socio-economic and political events like the pandemic and Brexit on foreign exchange rates is considerable. Since the UK referendum, the GBP has continuously dropped. A similar pattern of peaks and troughs was seen with the US Dollar and the recent presidential election. Tuning into what’s happening across the world can help to ensure you know when to lock in favourable rates, protecting you against currency fluctuations and giving you budget certainty, otherwise known as hedging. Here at Swoop we work with a number of FX providers that can also help you secure these favourable rates.
3. Find the best bank
Whether you frequently trade in numerous currencies or it’s an occasional transaction, a multi-currency account could be your best friend. Whereas high-street banks have a reputation for charging high fees, challenger banks have disrupted the sector by allowing you to hold a number of accounts in different currencies. This enables you to send and receive money in a country’s local currency and not incur any charges. To take advantage of the banks that offer multi currency accounts, we’ve created an easy to use comparison tool.
The team of experts at Swoop will be happy to explain the best way for you to go about ensuring you’re not overpaying on your FX. Get in touch today. Click here to get registered.