Business Foreign Currency Exchange Q & A

Bank exchange rates are you being ripped off by your bank

Business Foreign Exchange Questions and Answers

Business Foreign Exchange Questions and Answers

Anyone contemplating transferring money abroad is likely to encounter a number of questions and decisions. Understanding the process behind international transfer is therefore vital. Here are some of the most common money transfer questions and their corresponding answers:

This is one of the most important questions and transferring money abroad is likely to encounter a few different costs. Whilst most people will be aware of the exchange rates which are in force for international money transfers not everyone is aware of costs which are incurred when receiving the money.

Some foreign banks will charge as much as 3% of transferred money to be received – something which can amount to a hefty sum for those looking to transfer larger amounts.

How can you overcome these costs?
In order to keep these costs to a minimum, individuals should look to transfer their money to accounts which will not be subject to banks receiving fees – such as those held by solicitors or estate agents in that country. These are known as notaire or resident accounts and will not be subject to the same fees as other accounts.

Using companies which open bank accounts on your behalf is a sensible option for those likely to make numerous transfers. This is because these will often be exempt from such bank charges.

Alternatively, it is always possible for you to discuss these charges with the bank and negotiate a lower fee. If you manage to do this then it is vital that you get written confirmation of the agreement. Ensure this is obtained before you transfer your money to give yourself some financial protection.

How long does it take to transfer money abroad?

In the modern world, we want everything to happen as quickly as possible and this is true when it comes to international money transfers as well. Of course, the length of time needed to transfer money abroad will vary depending on where it is going and who is transferring it but nowadays this process can be fairly rapid.

This means that an exact time frame cannot be given until all relevant information is provided. Most transfers occur bank-to-bank and mean that delays incurred to process and clear the funds in the beneficiary account are passed on to you. Some companies may have procedures designed to alleviate these and are therefore worth investigation when considering money transfers.

These delays will typically be longer for non-major currencies, whilst those most commonly used will benefit from short transfer times of up to 24hours. This time frame is typically used with currencies such as GBP, EUR, USD and CAD.

All money transfers handled by companies will use SWIFT technology for their transfers. This is the most reliable and safest way to transfer funds between banks and is also the quickest.

What affects money transfers?

Transferring money abroad can be affected by a number of different factors, with situations in the destination country and exchange rates being common examples. Exchange rates are perhaps the biggest effect for money transfers and can be very difficult to predict.

The fact that exchange rates differ on a day-to-day basis makes it difficult for people to plan their money transferring effectively. Whilst future predictions cannot be made with any certainty or assurances, professionals in the field will be able to advise people on market trends and patterns connected with money transfers.

These will be based on historical events as well as current political and economic conditions. For example, if a country is experiencing a low employment rate then it is likely that their currency will be weakened, leading to changed exchange rates. Interest rates held by banks will also affect the exchange rate, as will global political events.

This means that anyone interested in transferring money abroad will need to speak to professionals who have all of the latest information concerning these areas close at hand.

The current economic condition has proved beyond a shadow of a doubt that exchange rates are impossible to predict. The current changes have been caused by a mixture of geopolitical and economic events and are just a few factors which can affect money transfer rates.

Can exchange rates be fixed?

For those looking to transfer money on a regular basis, exchange rates can be fixed for a period of two years. This means that changes to current exchange rates will not affect the cost of your transfer and can, therefore, be hugely beneficial.

The fixing of exchange rates is done through Forwarding Contracts which can be either flexible or static. Flexible Forward Contracts are used by those who are uncertain about when their funds will be required. This will allow the money to be received or withdrawn earlier than expected.

Normal Forward Contracts do not offer this option, however, and are therefore only available on the prearranged date. These contracts will require 10% of the trading amount to be provided on the trade date with the remaining 90% being needed when the funds are required: known as the value date.

This is just one way in which companies can reduce the risk of money transfers, with Limit Loss Orders being another example. A Limit Loss Order or Limit Order is an agreement which allows companies to book currencies when they reach a predetermined value and can be placed either above or below the current exchange rate. Professionals will be able to advise individuals on the best time to transfer money but a Limit Order will allow them to work autonomously, saving you time and potentially money.

How does Compare Money Transfer Operate?

With access to these services and advice networks, many people ask how Compare Money Transfer actually operates and makes their money. The vast majority of income is generated through advertisements which appear on-site or through a commission. The consumer receives the services free of charge and only money transfer providers who are FSA regulated are listed on the site.

Compare Money Transfer also specialises in this field, allowing them to offer tailored advice that is unbiased and based firmly on facts. The intention of the company is simply to compare exchange rates for international money transfers in order to help advise customers on the best course of action.

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