Any company dealing with business foreign exchange , either to receive payment for goods and services or to make payments to suppliers, is exposed to financial risk created by fluctuations in the foreign exchange markets. Rather than worry about the varying rates of exchange, companies can proactively manage their transactions in a foreign currency by utilising the services of a FCA (Financial Conduct Authority) regulated foreign currency broker.Â
Rates offered by high street banks and other institutions often give poor value due to the breadth of the currency spread – the difference between the buying and selling rate. Transaction fees can be high as well and are charged in addition to any margins made within the financial exchange.
A specialist foreign currency broker will deliver a professional service and achieve the best possible rates. For a business that may depend upon imports or exports this business foreign exchange service can be a lifeline, especially if the company is reliant on volume sales.
Low margins can quickly be eroded by unfavourable exchange rates but the support of currency brokers has enabled many companies to turn a negative situation to a positive by eliminating costs associated with dealing in foreign currencies.
This development has broken down barriers and contributed to a free trade environment where the historic costs of dealing with customers and suppliers located in another country are absent.
Proactive foreign exchange dealers are allocated to companies so they can maintain contact with business clients and discuss ways in which exposure to foreign currency risk can be reduced. Due to the large and regular volumes of business foreign exchange payments made by companies, the brokers have access to preferential rates and can pass on savings to clients in the form of more competitive exchanges.
Whether a business requires a better deal on a spot rate or is looking to fix a price at a point in the future through the use of a forward contract, a broker is well placed to assist. Transactions are processed with efficiency and are as safe as those conducted in the regular banking system.
At a time when businesses are reviewing all aspects of their activity so that efficiency savings can be generated, the use of a foreign currency broker appears to be a solid means of achieving this aim.
How foreign exchange Markets can affect your business
When running a business which operates internationally you must be aware of the risk posed by foreign exchange movements.
If you are importing products into the UK and the GBP experiences a slump your products plus any potential import charges of fees will become more expensive. On a more optimistic note, if the GBP appreciates these products and import costs will become cheaper.
However, if you are running an export operation or selling products to other businesses or individuals an increase in the Pound will cause your buyers to look elsewhere.
Fortunately, foreign exchange brokers exist to manage exactly these challenges and will allow you to supervise your foreign exchange and charge clients in their local currency.
Reducing foreign exchange risk to your business
Whilst you are unlikely to be able to completely control foreign exchange risk you can help your chances by applying several practices these can include:
- Discuss your business and requirements with a foreign exchange broker
- Manage your business foreign exchange in a way which suits the way you work
- Get a grasp of the savings and plan how to invest these saving back into your business
- Always cross-check the rates you are offered to ensure they remain competitive
- Explore all Foreign exchange contracts available to complement your business
Why use a foreign exchange broker to manage my business foreign exchange?
Sourcing the best moment to execute your business foreign exchange transfers can be a challenge. Rates move all the time, and data releases can immediately change the direction of the currency pair in question. A foreign exchange broker can manage every aspect of your business foreign exchange, respecting invoice timeframes, payment conditions and ensuring you are presented with more options than the bank.
Managing business foreign exchange online
Most credible foreign exchange brokers will offer the ability to manage business foreign exchange payments both over the phone and online. Many also offer convenient money transfer apps and round the clock service. Whilst it’s always advisable to seek guidance over the telephone for significant transfer you can if preferable exchange money online and add beneficiaries to ensure payments are sent quickly.