Many businesses around the world now operate internationally. The digital nature of
Businesses are no longer limited by physical or geographical boundaries as in the past. Now, you can as easily market your services and sell goods online to customers on any continent.
The e-commerce sector was worth over $2 trillion in 2017 so it is clear that this kind of trade has grown enormously over the past decade.
What this also means for businesses that sell goods or make deals abroad is that they have to handle their finances efficiently.
Dealing with international customers brings its own set of challenges in terms of business finance. This is not without its risks and all business owners need to be able to deal with it effectively.
Ways to look after your business finances on foreign deals
One of the challenges that all international businesses face is dealing with money efficiently and securely. More specifically, sending or receiving money via the global foreign exchange sector.
Let’s say for example you issued an invoice as a UK company when the exchange rate was 1.20
Of course, the same scenario can happen the other way around when it is you paying for goods or services in a deal.
How can businesses best deal with this problem?
1. Get the best exchange rates you can.
This is the obvious solution and one that most businesses will pursue.
There will be a wide variety of exchange rates to take advantage of on any given day and finding the best one will save your business money in the long term.
2. Lock in exchange rates if possible.
Although any last-minute deals can be worked out on the day itself, it is worth planning any financial transactions in advance if you can do so.
Some providers of money transfers overseas will let you lock in a
That will ensure you are not open to the fluctuations in the currency exchange market that could otherwise cost you money.
3. Consider using foreign currency accounts.
If you begin to make frequent deals internationally then you may want to consider opening relevant foreign currency accounts with your own bank.
It is a bit of a complicated process but can be worthwhile for larger
One of the best reasons to do this is that it avoids having to exchange money at all. Your business would simply hold balances in the foreign currency accounts to pay for goods in the future as needed.
4. Don’t be tempted to speculate.
Locking in exchange rates is one thing but holding off making a financial transaction in the hope that rates may get better in the future is not.
Unless you are an expert on the FX market, it will be almost impossible to do this with any success.
The most probable outcome is that you end up having to take a worse exchange rate in a few days’ time.
5. Watch out for fees.
One thing that can really hurt your finances when dealing with international business
The fees are charged by banks or other companies who handle the transaction for you. Banks, for example, can charge up to 4% on the amount you send!
6. Consider using specialist online money transfer companies.
One of the best business tips when making international deals is to use an online money transfer company.
These specialist companies provide a whole host of the benefits, from the best exchange rates
There are many of these companies around so finding a good one is essential. Doing this yourself would take up a lot of time so it is best to use an online comparison site instead.
These help you decide which company to use and where to get the best rates on international money transfers.
Expanding abroad means planning your business finances.
Expanding abroad is a great opportunity for any business but it is something that should be done in a carefully planned manner.
A key part of any planning should be your business finances and how they will need to be managed when dealing with foreign clients.
Hopefully, the above tips have given you some useful pointers on how to go about it.