Ten top tips for businesses making international payments

Carl Hasty, head trader with Smart Currency Exchange offers ten tips for businesses looking to make international payments.

Do your homework

There are now a wide range of options for making payments abroad. First and foremost, then, do your homework. Consider your requirements: do you need to make a few one-off payments? Or do you make regular payments to particular suppliers? For regular payments, a specialist foreign exchange (FX) supplier is the most cost effective option.

Look beyond banks

Banks were once the mainstream option for making international payments. However, technological and regulatory change has opened up the FX market. Many of the newer solutions compare favourably to banks – offering lower fees, more competitive exchange rates and better service.

Beware hidden charges

The two costs to consider when making payments abroad are fees and exchange rates. With some companies you need to be wary of hidden charges which can mask the true cost of a transaction. In terms of exchange rates, some providers might advertise ‘commission-free’ payments but then hike the exchange rate they offer. Look carefully at the small print whoever you use.

Ask about final costs

Look for transparency and openness from your FX provider. A reputable FX provider should happily tell you the final cost of your transaction after charges and exchange rates are taken into account, enabling you to make an informed decision.

In whose interests?

Our own FX traders are not paid commission – meaning they always have the client’s best interests at heart. This, for us, provides a safety net for the client, yet it is surprising given the scrutiny the financial services sector has been under of late that more firms don’t take our approach. Whichever FX supplier you choose, it is worth asking how their traders are paid.

Comparing rates

The UK has the most crowded FX brokering market in the EU. But how do you compare the exchange rates of various brokers? A number of useful comparison websites have set up to help with this - www.fxcompared.com is clear and easy to use.

Don’t forget security

Ensure your FX company is FSA authorised. Also satisfy yourself you are dealing with a reputable player. Ask for testimonials and find out how long the company has been in operation. Currency exchange businesses don’t have to be authorised by the FSA unless they are trading more than three million euros a month – meaning if there is a problem, you won’t be guaranteed full protection.

Service is key

We believe your FX and international payments provider should be doing more for you than simply providing competitive rates. They should work with your business to understand its goals and keep it up to date with events in FX markets – by doing so, your business could save thousands of pounds each year.

Timing is everything

We always inform clients when the exchange rate for the currency they are transacting in appears good – and offer them the choice to ‘buy in’ currency for future payments using a forward contract. Businesses save a fortune by getting the timing right; again, this is something a quality currency partner should help with.

Be careful!

FX markets are volatile right now, reflecting uncertainty in the global economy. Ask your FX supplier about hedging techniques which can help protect against wild fluctuations in exchange rates. They should be ready to explain about the principles of hedging – and how they apply to your business requirements - in a clear and easy to understand manner.

For more information about FX, please see www.smartcurrencybusiness.com and download our free Outlook. Alternatively call us to discuss your requirements on +44 (0)207 898 0500.

Think Smart, Act Globally

Having a global outlook is a vital attribute for business leaders argues Carl Hasty, Head of Trading with Smart Currency Exchange.

The issue of management and leadership – a subject which, I think we would all agree, is critical to the fortunes of the national economy - often comes down to the question of what makes a good leader. For my own part, I firmly believe one of the most important attributes for business leaders of the future will be the ability to think globally.

Now, you don’t need to be Einstein to figure out why I should draw such a conclusion. Figures from earlier in spring showed that the UK had once again slipped back into recession. Indeed, since mid-2008 the UK has had seven quarters of GDP growth – compared with nine quarters of GDP contraction.

On the face of it, then, these are worrying times, particularly given ongoing unrest in the Eurozone. And yet, there is a world of opportunity out there. At Smart Currency we work with hundreds of exporters who see the world – not the UK – as their market. They think in global terms and their leaders and management teams have a global vision.

So is now a good time to export? In my opinion, there’s never a bad time to be exporting. Question - what do the following countries have in common: China, Qatar, India, Iraq, Estonia, Turkey, Saudi Arabia, Indonesia, Hong Kong and Singapore? The answer is that these are just a few of the 70-plus countries whose GDP growth rate exceeded 5 per cent in 2011.

Clearly, the global market offers opportunities for firms around the world. My overriding point here is that it is easy to get caught up with the doom and gloom engulfing the UK economy and, in the process, lose sight of the fact that many parts of the world are developing fast in all manner of business sectors.

Currency strategy

While I am all for thinking globally, I would add that any business embarking on an international strategy right now needs to have a currency strategy in place. The uncertainty of the global economy has led to volatile exchange rates in recent times. Sterling has moved markedly against the euro and US dollar of late. For exporters without a currency strategy, movements in sterling’s relative value will prove costly.

At Smart, we can help your business develop a robust currency strategy in order to negate the currency fluctuation risks associated with international trade. Smart adopts a range of techniques such as forward and spot contracts to provide stability to those engaged in international trade. We also help exporters to maximise margins by offering significantly better-than-bank currency exchange rates.

We expect more currency swings in the next few months as the Groundhog Day scenario that is the Eurozone crisis rumbles on. By partnering with Smart you won’t need to worry about currency movements and their impact on your foreign contracts, and can instead focus on developing your business beyond the shores of the UK.

To ensure you’re getting the best information on FX, get a risk strategy in place. Smart Currency Exchange can help you do this in one phone call. Call us now on 020 7898 0500 or visit our site at www.SmartCurrencyBusiness.com