Any business that has to pay trade partners or employees in other countries should give some consideration to currency volatility and unnecessary conversion fees.
Charges for processing these simple transactions can easily rack up, especially if a company uses a high-street bank for all its financial transactions.
However, with a smart approach, many of these costs can be eradicated, according to Brian Jamieson, CEO and co-founder of FX and payments specialist Centtrip. Here he offers his advice on how to navigate this area and reduce costs associated with currencies.
Avoid mark-ups on international payments
It is not uncommon for businesses to use banks to make payments, brokers to convert currencies and credit card providers for business travel and expenses.
A vast number of UK SMEs that are involved in exports and imports and transfer money overseas only use their business account which means they are effectively spending billions of pounds more than they need to on fees and unnecessary charges every year.
High-street banks often place a high premium on international money transfers, adding mark-ups instead of using mid- or live-market exchange rates. To avoid hefty charges, SMEs have the option of using an exchange house or broker to make overseas payments, as both will offer more competitive pricing than banks. Alternatively, some fintech firms and challenger banks now offer even more competitive rates.
Cut out credit card fees on expenses
For many businesses, it’s essential that staff travel abroad for work, whether it’s scoping out new clients, visiting suppliers or shaking hands on a deal.
These trips can often be costly, especially if each bill is going on a company credit card. For every transaction, the card provider will typically pocket around 2.5% of the transaction value, with some charging considerably more. A clever way to avoid this is by giving your travelling employee a prepaid multi-currency card.
With a Centtrip card for example, the employee can hold up to 15 currencies at one time and all payments in those currencies will not incur any currency mark-ups or unnecessary fees. As well as offering substantial savings, the business will also have far more control over its expenditure.