Apr 18
Exploring alternative options to a traditional bank when looking to transfer money abroad can often appear daunting to individuals with little or no knowledge of how foreign exchange brokers work. However, those who are prepared to do some research and shop around prior to transferring capital for private or business purposes are sure to reap the rewards of choosing a Commercial Foreign Exchange Bank over a traditional bank. Foreign exchange specialists offer competitive exchange rates and avoid expensive service fees.
Before deciding what service you are going to use when transferring money abroad it is important to understand whether a Foreign Exchange Broker can offer you a service that will meet your requirements. If you are buying a property abroad, emigrating, paying suppliers abroad, importing goods or simply making a one off international payment it is certainly worth exploring what services Currency Exchange Specialists have to offer. As a rule of thumb if you are looking to transfer any amount above five thousand pounds then a Foreign Exchange Broker will be able to cater for your needs. For amounts less than this, it is worth considering a Money Transfer Service through which money can be sent abroad, online or from the high street.
Apr 18
In order to understand how foreign exchange brokers work and fundamentally how their service can benefit you, it is important to have a basic understanding of what an Interbank spot rate is. An Interbank spot rate is an exchange rate which banks use to buy and sell currency to each other it is equal to the last three trades in the market over ten million pounds. The difference between the interbank spot rate and the rate offered by the money transfer service you choose is called the margin. Traditional banks generate healthy profits by offering money transfer services with a significant margin off the interbank rate, often as high as 5%. Foreign Exchange Specialists on the other hand offer far superior exchange rates to their clients, usually with a margin of less than1% off the interbank rate. Commercial Foreign Exchange Banks make their revenue from the small margin between the spot rate they buy their currency at and the price they pass on to their clients. Therefore, the majority of the benefit is passed on to the customer when using a Foreign Exchange Specialist as opposed profiting a bank.
In addition to the higher margins attached to money transfer services and banks there are often a number of service fees which banks can charge resulting in them becoming a far more expensive option in comparison to using a Foreign Exchange Specialist.
Apr 18
If you are looking to transfer money abroad but are in no rush to make the payment then it might be worth considering a forward contract. Forward contracts essentially enable a client to order currency when there is a particularly attractive exchange rate on the market and pay for it later (often up to two years) when the payment needs to be made. Forward Contracts are particularly applicable to individuals who are emigrating or thinking about buying a property abroad. For example if you are buying a house in one year’s time and you need to buy £200,000 worth of Australian Dollars then you will have the option to order this currency when you want any time prior to that at the exchange rate at that time and make the payment at the agreed date in the future. This gives great added protection to businesses and individuals against unattractive exchange rates for future transactions.
Your money can be transferred as quickly or as slowly as you like. If speed is a priority then as soon as you have opened an account with a Currency Exchange Specialist and agreed on a rate, your currency can be transferred immediately after you have paid for the contract.
In addition to a rapid service offered by Foreign Exchange Brokers your money is sure to be safe as long as you ensure that the broker you choose has the HMRC seal of approval as Foreign Exchange Specialists are not required to be regulated by the Financial Services Authority.
Apr 18
When buying a house overseas and dealing with hundreds of thousands of pounds, exchange rates become increasingly important. For example, if an individual was to buy a property abroad using a money transfer service with a traditional bank and the margin was set at 5% on a property of £250, 000 then you could save £12,500.
In addition to competitive exchange rates another huge benefit of using a foreign exchange specialist when buying a property abroad as discussed above is the option of making use of a forward contract in order to avoid getting hit by poor exchange rates in a volatile market.
Often foreign exchange specialists will assign clients an Account Manager who will be able to use their expert knowledge to advise their customers as to how and when the best time is to make the payment abroad, helping you save money and time.
Apr 18
It is a common occurrence for business’s to have to make regular or spot payments abroad and/or for imported goods and therefore it makes sense to utilise a Foreign Exchange Broker who has tailored a service specifically for corporate clients in order to get a competitive service and maximise their profits. When a business gets in contact with a corporate foreign exchange broker often the first task they will conduct is a review of your existing foreign exchange practice and help you reform your previous money transfer systems that had been put in place in order for you to get the most for your money.
The Foreign Exchange market is the biggest in the world with more than a trillion dollars being operated daily. This makes it a liquid market that is notoriously volatile so in order for a company to avoid adverse reactions in the market they can make use of forward contracts as outlined above.
Another option that is available with Foreign Exchange Corporate Services is placing a Limit Order where business owners are given the opportunity to buy or sell currency when an agreed rate of currency becomes available. This benefits Corporate Clients as it eliminates risking losing money with poor exchange rates and usually has the added benefit of the free service which can be cancelled any time.
Whether it’s a one off payment or you are looking to make regular payments abroad it is worth contacting a Foreign Exchange Specialist in order for you to make the most of competitive exchange rates, a quick and secure service and added services such as Future and Limit orders. Foreign exchange specialists can help you protect yourself in extremely volatile market.
