Foreign exchange: preparing your clients’ businesses for Brexit
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 get ready to embark on 2021, and with a final decision on Brexit just around the corner, it’s important now more than ever to make sure your clients are locking into their profit margins and not paying too much on their international payments.
So 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 FX costs effectively could free up cash flow and help ensure that your clients are in a stronger position when a EU trade deal is announced in January.
1. It’s a changing marketplace
The most important thing to remember when your client is considering their FX costs is that the market fluctuates. It’s important to mitigate the risk of a volatile currency market to ensure they are not left in a tricky situation, e.g. high FX costs. Fortunately we have a panel of partners who can help them do just this by offering a range of products and services to suit your client’s needs. Contract types will vary to accommodate ongoing trades, and may include the opportunity to lock in a rate for upcoming transactions. Alternatively if your client is looking to trade imminently, spot contracts could be the right option for them.
2. What’s going on in the world?
Building on the point above, the impact of socio-economic and political events like the pandemic and Brexit on foreign exchange rates is considerable. Since the UK referendum, the GBP has continuously dropped. A similar pattern of peaks and troughs was seen with the US Dollar and the recent presidential election. Tuning into what’s happening across the world can help to ensure your client knows when to lock in favourable rates, protecting them against currency fluctuations and giving them budget certainty, otherwise known as hedging. Here at Swoop we work with a number of FX providers that can also help your client secure these favourable rates.
3. Find the best bank
Whether your client frequently trades in numerous currencies or it’s an occasional transaction, a multi-currency account could be their 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 your client 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 your client to go about ensuring they’re not overpaying on their FX. Get in touch today. Click here to get registered.