Foreign exchange (FX) costs are a problem for many businesses operating in different markets, but research highlights that firms (and individuals) can save money if they ditch their bank in favour of a currency specialist.
However, all too often businesses are left in the dark about the true cost of their bank’s money transfers, meaning their FX bill is mounting and they don’t even realise they could be saving money.
Research from YouGov shows banks are saddling companies with hefty “hidden” foreign exchange fees.
Banks charge between 3% and 6% for money transfers, but the survey of small business owners found that more than 80% do not know the scale of this FX cost.
Just over a quarter (27%) of the business owners surveyed said banks make it clear how much they charge for handling overseas money transfers.
This is crippling businesses who are seeking to expand into new markets. According to the research, 43% of company bosses claimed this lack of transparency about FX costs is a barrier to them trading internationally.
For many businesses, the solution lies in working with a specialist provider, which can be cheaper and results in no hidden costs. Research carried out by Currency UK in 2015 shows a currency specialist would lead to savings of £3,327 per year for a business transacting a representative £170,000 annually in Euros.
Moreover, currency volatility is on the up, creating added risks for businesses.
The April 2015 International Trade Monitor report found 56% of SMEs in the UK cited currency volatility as a concern for their business.
London-based Digimob reports that foreign currency accounts for 90% of its annual revenues, making it particularly susceptible to movements in the currency markets.
Digimob says that working with a specialist provider has made it aware of locking in the exchange rate in order to reduce risks.
“We are now locking in exchange rates so that we have confidence in price and revenue, as we have previously been hit hard by FX fluctuations,” the firm says.
Posted in Business Resources on Jun 19 2017
About the author //
William, Bill to the office, is our Sales Director.
With over 18 years experience, he has helped PLCs, Limited Companies, sole traders and private individuals alike save money by mitigating foreign exchange risk and international payments.
A strong believer in people, William nurtures his team’s talents for the benefit of both Currency UK and the customer.