If you’re looking to make an international money transfer for your small business transaction needs, you need to be able to find a provider that you can trust. This post will show you why using a currency broker’s service is a sensible decision and how to choose the right one for your business.
So why use a foreign exchange or currency broker?
More often than not, a broker will not charge you a fee and you should receive a better exchange rate than your average high street bank.
By registering an account with the broker, a dealer may contact you via the phone to discuss a transfer; though it is becoming more popular for this to happen entirely via the internet and companies such as www.4xcurrency.com operate this way, cutting out the potentially lengthy bartering process that can result from a phone call.
Once that you are happy with the costs and the exchange rate, you can book the transaction, give details of the recipient’s bank account and pay the agreed amount via electronic transfer.
As soon as the funds have been received, the broker will send the currency electronically to the beneficiary. On a whole, this process shouldn’t take longer than one or two days.
What to look out for:
As already stated, banks may charge a little more than brokers, and some brokers will of course charge more than others.
For example, if you need to send £10,000 in Euros, by choosing a broker you may only need around £8,400, though with a bank, this may rise to £8,800.
For transfers larger than £3,000 however, there is not usually a fee for transferring money, though banks can charge fees as high as £40.
So in effect, there are two variables to consider, the fixed fee issued by the broker or bank and the margin imposed on the actual rate being offered.
Types of transfer
Usually there are three types of transfer to choose from, and you should select the one that best suits the timescale in which you need the whole process to be completed.
The simplest kind of transfer is of course one at the current exchange rate (often called a spot deal), wherein you transfer funds at the rate of the exchange when you made the deal.
On the other hand, another very popular kind of deal is a ‘forward contract’ that allows you to lock today’s exchange rate (on the basis that it is healthy) for transferring the funds at a later date – this can be arranged up to twelve months in advance; a popular option for those who feel that the market may take a downward trend.
You may however have to put down a deposit for the forward contract to go ahead, with the rest of the funds due on the day of the transfer.
The third option that you may wish to choose is a ‘limit order’, where you will choose a rate to exchange and once that this rate is reached; the broker buys the currency and transfers the funds.
This is a great option if you can spare time waiting for the optimum rate to be achieved, though many brokers will insist on a minimum transfer amount.
Choosing your broker
As already stated, some providers will charge less than others and some may employ no dealers and will not call you to negotiate the transfer. Rather, the transfer will be processed electronically; saving you money in the long run.
Many exchange companies are now looking to run on this basis.
There are many currency brokers offering similar services; you have plenty to choose from. What’s actually challenging is how to choose the right one.
With that being said, be sure that you ask around: Read reviews, ask your fellow small business owners for recommendations and consult with your mentors.