When would I need foreign exchange?
The market for exchanging goods and services is becoming increasingly global. Accessing customers overseas is a common growth path for small businesses. Accessing suppliers overseas is often a way to reduce your supply costs not to mention expanding the choice of suppliers available to your business. And, many businesses, as part of their growth plan, will start opening offices overseas which mean they also need to have a way to pay employees in local currency.
In order to make the most of these opportunities, it is important to be able to transact in the local currency of your customer, supplier or employee. This takes the burden of currency conversion away from them and makes you more attractive as a business, client or employer. In most cases, it will also save you money. In every case, it will make it easier to monitor and audit your international transactions.
What do I need to do to be able to use foreign currency?
One of the easiest ways to access foreign currency is through a trusted international payments provider. They will be able to set up a bank account dedicated to supporting your foreign currency transactions so that you can track and manage all your international payments with ease.
Some businesses chose to work with an FX Broker. This is a telephone based service where each time you need access to foreign currency you call the broker to book the currency you require. It can be a labour intensive approach and often the brokers will increase the foreign exchange margin over time.
Some businesses will simply work with their existing bank, because they have a trusted relationship in place. While some banks are very competitive and offer an excellent foreign exchange service, there are banks who will take advantage of the lack of experience of smaller businesses and charge for every high foreign exchange margins and transaction costs.
One thing we advise strongly against is using your bank to send sterling which gets converted overseas. This is the most expensive way of processing foreign currencies. It also is the approach which gives you the least amount of control over the process. In this instance, you will be charged a high and ever changing rate for the currency conversion and the transaction fee. And in many cases you won’t actually know what you are being charged.
What methods are available for making international payments?
There are three ways we recommend for making international payments:
How can I manage risk?
By using the OBD® payment platform, you are already managing a number of risks. As we partner with an FCA-regulated e-money firm, we take our regulatory requirements seriously.
Payment Screening: our partner carries out stringent payment screening controls for the detection, prevention and disruption of financial crime and sanctions risks. Complies with Sanctions and Counter Terrorist Financing laws, with all payments exposed to screening against various official Sanctions databases, including those published by the UN, European Union, US Treasury OFAC and HM Treasury (UK).
Transaction Monitoring: All transactions facilitated for clients are subject to continuous monitoring, ensuring that the risk of our clients' exposure to financial crime risks are mitigated.
Workflow authorisation: Our partner, EQPay, understands that every business has different internal authorisation requirements when it comes to making payments. Our platform supports the implementation of tailored workflows, helping to ensure that your account corresponds with your team structure and internal processes. EQPay enables you to:
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