With so many things to consider when running a business, foreign exchange (FX) can often be overlooked despite the vast majority of SMEs buying or selling goods abroad. As we continue into 2021, and with Australian exports growing once again, it’s important now more than ever to make sure you’re looking into your profit margin and not paying too much on your international payments.
We’ve pulled together a few key tips that any business owner should keep in mind when handling international money transfers. While it might seem less pressing than other business matters, managing your FX costs effectively could free up cash flow and help ensure you’re in a stronger position. Especially when faced with looming trade uncertainties such as the growing volatile geopolitical tensions between Australia and key players like China and US.
1. It’s a changing marketplace
The most important thing to remember when considering your FX costs is that the market fluctuates. It’s important to mitigate the risk of a volatile currency market to ensure you’re not left in a tricky situation, e.g. high FX costs. Fortunately we have a panel of partners who can help you do just this by offering a range of products and services to suit your needs. Contract types will vary to accommodate ongoing trades, and may include the opportunity to lock in a rate for upcoming transactions. Alternatively if you are looking to trade imminently, spot contracts could be the right option for you.
2. What’s going on in the world?
A range of headwinds ranging from macroeconomic and geopolitical concerns to weakening outlook for most global economies are set to continue having a considerable impact on foreign exchange rates. Tuning into what’s happening across the world can help to ensure you know when to lock in favourable rates, protecting you against currency fluctuations and giving you budget certainty, otherwise known as hedging. Here at Swoop we work with a number of FX providers that can also help you secure these favourable rates.
3. Find the best bank
Whether you frequently trade in numerous currencies or it’s an occasional transaction, a multi-currency account could be your best friend. Whereas high-street banks have a reputation for charging high fees, challenger banks have disrupted the sector by allowing you to hold a number of accounts in different currencies. This enables you to send and receive money in a country’s local currency and not incur any charges. To take advantage of the banks that offer multi currency accounts, we’ve created an easy to use comparison tool.
The team of experts at Swoop will be happy to explain the best way for you to go about ensuring you’re not overpaying on your FX. Get in touch today. Click here to get registered.