The Smart way to make company relocations more cost effective

Unfortunately for many businesses and their employees, the issue of currency exchange becomes an after-thought when relocating abroad – despite the potential for this aspect to be the most costly of all.

There are plenty of things to consider when undertaking an international relocation. There is selecting a removals company, organising accommodation in the new country, arranging visas for staff moving outside of the EU, ensuring adequate transit insurance is in place, booking flights, sorting what equipment will be relocated...the list goes on. Yet managing currency transfers is all-too-often forgotten.

International relocations will affect an employee individually, the company's HR division as well as the business at large, so the costs of overlooking any means of achieving substantial cost savings can have wide-felt reverberations.

HR departments must ensure that any relocation produces cost benefits and/or improved efficiencies in order for the move to be feasible. There is also a duty of care for employees, while maintaining a satisfactory level of productivity.

This requires a careful balancing act, making the move attractive for employees so as not to lose skilled workers, while meeting budgetary constraints.

When making payments associated with an international relocation, HR managers should look not just at the costs of the required services but also the exchange rates they are receiving to ensure optimal value is being achieved. Foreign-denominated costs can include immediate employee expenses, employee accommodation, visa applications, taxation registrations, local insurance coverage and so forth.

For a business as a whole relocating offshore, the cost burdens will be even more acutely felt. Indeed, changes in exchange rates can mean the difference between profit and loss on future transactions, and even negate the need to move at all.

Exposure to currency rate fluctuations does not just affect the cost of the immediate relocation.  On an ongoing basis, exchange rate movements directly affect the cost of imported materials, the competitiveness of exports and the profit margins on sales. Exchange rates also have more wide-reaching affects, such as on the price of energy and cost of living – affecting business operating costs and staff wage pressures.

Indirectly impacting on businesses are the impacts on the employee. Even if the business directly covers the costs of their relocation, there will still be personal costs incurred, such as transferring money from the sale of UK assets, accessing their salary and personal travel back to the UK.

Prohibitive costs in these areas have the potential to reduce the attractiveness of a relocation to employees, result in demands for higher relocation allowances or lead to employee stress which, in turn, affects staff productivity and morale.

Given these wide-reaching effects of adverse foreign exchange transactions, it is crucial for business operators to consider whether currency risk mitigation strategies are factored into their  overall risk assessment and management strategy.

There are a number of ways businesses can reduce currency-related costs during a relocation. For example, forward contracts enable a favourable rate to be locked in for up to 12 months in advance, and are a valuable means of delivering cost certainty and budget integrity. Orders to buy allow non time sensitive transactions to be completed once market rates reach a a pre-determined point. And a limit order allows a business to set a floor under the price at which it is willing to make a trade, so as to restrict wild fluctuations and protect against losses from adverse rate movements.

Once a risk mitigation strategy has been formulated, the next step is to determine a way of implementing it that does not add to the already numerous expenses incurred as part of the relocation.

Far from being effective management tools, high street banks are actually the least efficient avenue in which to pursue currency transfers. Notorious for poor customer service and lengthy queues – both in person and over the phone – banks also charge hefty transfer fees on most transfers for SMEs.

These fees can equate to £30 or more per transfer. For businesses making dozens of transfers each week or month, these fees can quickly add up to thousands and even tens of thousands of pounds. Banks also effectively double dip on currency transfers by providing less-than-competitive rates of exchange.

In any aspect of an international relocation, Smart Currency can offer significant cost savings and added value – at no direct cost to the user.

As a reputable international payment specialist, Smart Currency Business assists UK SMEs by offering tailored risk mitigation planning, access to all of the major currencies and the full suite of currency transfer services. Smart does not charge transfer fees on transactions over £3,000 and offers better-than-bank exchange rates which deliver savings of as much as 4 per cent of the value of the transfer.

For the individual, Smart Currency Exchange assists clients on large and regular transfers, which are both handled efficiently and very cost-effectively. This personal service is a great help during what can be a difficult and stressful time.

For more information on how Smart Currency Business can reduce the costs of an international relocation for your firm and your employees, call us today on 0207 898 0500.

Case study: Claydon Drills

When your livelihood depends entirely on the whims of Mother Nature, it is absolutely vital to address the areas of your business that you can establish complete control over. This is the issue faced by Suffolk based company, Claydon Drills, who design and manufacture agricultural seed drills for farmers.

Denise Claydon tells us: “Our industry is 100 per cent weather dependent so if there is a bad year, of course this impacts on sales of our drills. 2012 has been a year of uncertainty. Some places haven’t even harvested yet and unfortunately this takes its toll”.

Claydon Drills came to life after Denise’s husband designed and built his own seed drill. After a neighbour caught glimpse of the innovative design and enquired as to whether he could purchase one of his own, word spread and soon their drills were being sold throughout the UK and across the water in Europe. With a need to pay suppliers in Germany and Italy, the company turned to their high street bank to complete the transfers.

Denise explained: “We used to have to travel to the bank, queue, wait in the bank for half an hour while they manually checked everything and then leave not knowing when they payment would clear. Inevitably it would take about a week and as business grew and we needed to pay suppliers more efficiently this level of service was no longer acceptable. This is when we began our search for a currency expert, found Smart and since that day, we haven’t looked back”.

“Initially Smart enticed us with good exchange rates but it was the incredibly simple process, excellent customer service and invaluable advice offered by Alex Bennett on how we should budget for international currency transfers which made us continue to use them. If I were ever to encounter someone who could benefit from their service like we have, I wouldn’t hesitate to recommend them!”

The message is clear. Managing your foreign currency exposure effectively is a vital requirement of any business that deals internationally. The team at Smart Currency Exchange have a unique understanding of the challenges faced when doing business internationally.

To find out more and download a free currency report go to www.SmartCurrencyBusiness.com or call Freephone 0845 638 0571 (or +44 (0)207 898 0500).

Making the push into new markets abroad

This week's view from Smart Currency

The big news item in the business world last week was the latest economic figures from the Office for National Statistics (ONS), which showed the UK clawed its way out of recession in the third quarter of 2012. However business and political leaders were quick to point out this result was helped, at least in part, by one-off events such as the Olympics, and that overall economic activity remains subdued.

Regardless of the official statistics, anecdotal evidence suggests that many British businesses are continuing to seek opportunities abroad in order to pursue growth or, in extreme cases, to survive. Indeed BPF President Philip Watkins has encouraged plastics companies in the UK to look hard at export opportunities, particularly outside of beleaguered Europe.

Many smaller companies in particular are often wary of venturing into new markets, fearful of exposure to exchange rate fluctuations. Indeed 65% of the businesses recently surveyed by Smart Currency Business agreed that such exposure acts as a deterrent to entering new foreign markets. However in doing so, these companies are missing potentially vital streams of revenue and profit growth, as well as the chance to diversify their base of both customers and suppliers.

When trading internationally, businesses must confront a range of factors, including foreign exchange. The difference between success and failure when facing these issues depends on the kind – and amount – of advice received from experienced specialists in the field. Devising tailored risk management strategies for entering new foreign markets is one of the services Smart Currency offers, which help businesses to make the most of new opportunities overseas during these subdued economic times at home.

 For more information on Smart Currency Business call: 0845 638 0571 (or +44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyBusiness.com

Case Study: Walwyn Fine Antique Clocks

The business of buying and selling antiques is not the same as your everyday retail operation. With such prized pieces of history on sale, buyers and sellers don’t tend to make hasty decisions. Although the need for international payments can be erratic, when it does arise, it is important that payments are made swiftly and that an agreeable exchange rate is achieved every time.

After running Kensington’s Rafferty and Walwyn Ltd for quite some years, Howard Walwyn decided to branch out on his own and his new company, Howard Walwyn- Fine Antique Clocks now handles exquisite timepieces from a range of makers spanning the globe. Dealing with suppliers and highly experienced craftsmen in a number of countries created a need to enlist the services of a reputable company to deal with all of their international currency transactions. On a friend from the antiques industry’s recommendation, Howard Walwyn was led to Smart Currency Business…

“After receiving the recommendation, I took the time to investigate Smart and a number of their competitors. The service that Smart provided was by far and away the best of the bunch, the rates offered put those offered by the banks to shame and no expensive fees were charged. Above all, Smart were reliable and trustworthy - just what we were looking for”.

Howard embellished on the levels of service received from his personal trader, Siobhain Barry: “I was instantly put at ease by Siobhain, so much so that I decided to use Smart Currency Business for not only my business account but my personal transfers too”.

He continued: “No matter how close together or far apart my payments are, the team are always on hand as soon as the need to make an international transfer arises. I am kept in the loop at all times so I always know where my money is and I enjoy feeling confident that I am getting the best rates possible at time of trade”.

In addition, Howard was quick to express his joy after hearing that Smart Currency Business had been appointed partner and recommended service provider to the British Antiques Dealers’ Association (BADA). It seems only right that for an organisation like BADA, who place such great emphasis on establishing and maintaining confidence between its members and the public, that they have forged a partnership with a trustworthy company who dedicate their time to getting to know and meeting the needs of their valued clients”.

Managing your foreign currency exposure effectively is a vital requirement of any business that deals internationally. For more information, get in touch with the team at Smart Currency Exchange on 0207 898 0503.

For more information on Smart Currency Business call: 0845 638 0571 (or +44 (0)207 898 0541 from outside the UK) or visit our website at: SmartCurrencyBusiness.com