No matter what industry you are in, regularly reviewing your business practices, supplier relationships and company infrastructure is an important exercise in ensuring you are ‘match fit’ for the year ahead. Many businesses systematically review their systems and controls at least annually, seeking out inefficiencies, looking for weaknesses in the business plan and identifying areas where costs can be saved.
Regularly review suppliers
Areas that can be more easily reviewed include financial contracts that usually come up for renewal at regular intervals. Items such as insurance policies, utility supplies, or other similar procurements can easily be put out to tender online to test their competitiveness. Banking relationships, on the other hand, are more difficult to scrutinise objectively especially when finance arrangements can tie the company in for extended periods. Despite this, there are still opportunities to review certain elements of banking that can now be handled elsewhere.
Outsourcing foreign exchange
Within the growing Fintech sector, technology led financial services solutions can now replace many elements of traditional banking at a fraction of the cost. One particular banking service that can be outsourced is foreign exchange and international payments. Independent foreign exchange brokers have been around for many years now and are increasingly servicing a growing market of businesses that trade internationally. The question is, what level of cost savings can be made?
Charges levied by banks on foreign exchange transactions are notoriously opaque and difficult to fathom. Although customers are made aware of charges for sending payments, they are kept in the dark about the sort of margins banks take out of the exchange rate. It is not uncommon for a bank to take a charge of 2-4% which, on a conversion of £100,000, equates to fees of £2,000 – £4,000. It is therefore not difficult to see how these costs can soon add up over time. A foreign exchange broker can reduce these costs significantly.
Free currency review
“There can be a degree of head in the sand mentality from some businesses that believe they are stuck with whatever exchange rates their bank gives them. Even worse, they have no mechanism for measuring the true cost of these transactions” says Jamie Holmes at CurrencyWave.com. By showing their customers wholesale interbank rates, CurrencyWave allows them to look under the bonnet and identify exactly what banks or brokers are charging them. “We offer a currency review service where we will undertake a free analysis of past FX transactions undertaken by a business to reveal the true cost. This compares wholesale exchange rates to the actual rates they achieved. As soon as they find out what savings can be made, most usually consider alternative arrangements” says Holmes.
Reduce risk
Ensuring that your international payments are handled more efficiently not only saves on hidden charges but allows your business to reduce the risk of outside influences affecting trade. It is reckoned that over 60% of companies involved in import/export do not have a strategy for dealing with the risk of currency fluctuations, despite a recent big increase in Sterling volatility. Foreign exchange brokers have been quick to recognise the lack of support the banks offer in this area and provide their customers with dedicated account managers to help with hedging their transactions.
If you would like to know more about CurrencyWave’s free currency review service and how it can help you improve your bottom line, call CurrencyWave on 0113 451 0180, email info@currencywave.com or visit www.currencywave.com.
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