At a time where saving money for businesses is crucial, finance teams need to be aware of how this can be done and explore every cost-saving option.
Foreign exchange costs are a problem for many businesses who import or export overseas and for those who may have had a drop in sales due to the coronavirus pandemic, getting the best return on each sale is increasingly important.
These companies and individuals may be able to save money on their foreign exchange by using a currency specialist as an alternative to their bank. For many businesses it may have seemed up to now, the easier option to leave their bank to manage their international payments, but with finance teams going through outgoings with great scrutiny, foreign exchange costs are a good place to consider a fresh approach.
Your foreign exchange is often an area where you can save money. This is partly due to the less competitive rates that lots of businesses are given, but also due to the fact that businesses who don’t have an fx strategy in place can end up paying thousands more if exchange rates move against them. Furthermore there are still many businesses out there who don’t even realise they could be saving money.
The reason why currency specialists are usually able to give you better rates than the bank is because of their much smaller operating costs. For businesses that are still trading at the moment and making sales, a potential saving of 1% to 3% on all your international payments is certainly welcome in the current climate, and depending on your current solution and the currency provider, savings of this size may be possible.
Ultimately, making cost-savings on your FX can be broken down into two key areas, firstly an initial saving now by using a more competitive provider, resulting in more money in your pocket on your current sales.
The second cost-saving approach involves looking at the longer-term. How businesses are able to adapt, enter new markets, retain customers and spend wisely will for many determine their survival over the next 12 to 18 months. A fundamental element of that is how you deal with your foreign exchange. All of the hard work and difficult decisions you may have faced recently of changing your services, making cost-savings and having to let people go, can all be undone by not having a proper foreign exchange strategy in place moving forward.
The foreign exchange market is constantly moving, however with Covid19 affecting countries around the world in different ways, the risk of volatility in exchange rates is particularly high. This could be extremely damaging to businesses who are already financially stretched due to the current landscape.
By using a foreign exchange specialist you can lock in exchange rates, eradicating the effect of them moving against you. While this may not result in direct cost-saving at this moment in time, particularly if your business has paused operations, it will result in cost-savings in the longer-term and more importantly offer your business protection. Now it is more important than ever to ensure your business is protected.
You can start the process of preparing for currency volatility yourself, the simplest way to do so is to be aware of what announcements both politically and financially could cause a shift in the market and plan your payments accordingly.
But, the most effective way to keep your bottom line safe when dealing with orders and payments abroad is to use a specialist. Our job as FX brokers is straightforward; we mitigate currency risk for your business and make the whole process of foreign exchange as simple as possible, no matter how difficult the current circumstances.
If you would like to find out more about how we can support your business with its foreign exchange requirements call us today on +44 (0) 20 7738 0777.
Posted in Business Resources on May 22 2020