How to save money on international payments
An exchange expert can help your business save thousands
Once dubbed the ‘Celtic Tiger’, the nation’s economy has roared back into life in recent months. Having shrugged off the legacy of the global financial crisis, we are in the midst of an export-led recovery. Not wanting to miss the boat, increasing numbers of intrepid small and medium-sized enterprises (SMEs) are looking to overseas markets to enhance their business performance. Consequently, these organisations have become increasingly reliant on making international money transfers, which if not managed effectively can end up costing much more than is necessary.
According to a recent survey issued by market research agency Eurostat, 17% of Ireland’ SMEs are selling internationally, compared to the European Union average of just 8%. This has largely been driven by continued domestic growth in the US and UK – Ireland’s biggest trade partners – which coupled with an underperforming euro last year, engendered a positive outlook for Irish exports.
Despite an abundance of benefits that exporting to new markets can offer Irish SMEs – profitability, innovation, augmentation, skills and tech development – operating internationally does not come without risks. The inevitable requirement to make international money transfers exposes SMEs to the unpredictable foreign exchange market, and its fluctuating rates; a scenario that will also impact enterprises looking to efficiently manage their outgoings and costs by importing the best value supplies.
Currency markets are sensitive to various political and economic factors, which can stimulate significant rate movements in a short space of time. Whilst these shifts often appear small, they can have a big financial impact – particularly on the costs and income of growing businesses with tight margins.
For example, over the course of 2015, the euro fluctuated between $1.04 and $1.21 against the dollar. That’s a variance of more than 16% - so if you were unfortunate with the timing of your overseas payment, your exports could have been 16% less competitive or your imports 16% more expensive.
Thankfully the Irish Times International Money Transfer Service, provided by exchange expert’s moneycorp, can help. Not only does the service offer exchange rates that are typically 2% better than a bank and transaction fees as low as €5, each client is assigned their own personal account manager.
Available at the end of the phone, your dedicated currency specialist will take the time to understand your requirement, talk you through the transfer process and provide expert guidance around the vagaries of the currency markets. They can explain the tools available to help protect you from negative rate movements, such as a ‘forward contract’. This allows you to fix an exchange rate for up to 2 years – so if you are happy with the rate now but don’t need to transfer the money immediately, you can secure the rate and budget ahead with confidence (please note that forward contracts may require a credit facility).
In addition to speaking with your personal account manager, you can take direct control of your international money transfers using moneycorp’s online service. This enables you to buy or sell currency and make transfers 24/7, so you can manage your international payments at your convenience – at any time and from anywhere in the world. The system allows you to monitor the progress of your transactions and manage recipient details – making it simpler to make repeat transfers.
Whether you’re importing or exporting, there’s never been a better time to broaden your business horizons overseas. So, don’t let the foreign exchange market hold you back.