
Get exclusive money-saving offers and guides
Straight to your inbox
Updated
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
When you run your own business, every single dollar counts. Finding every way you can to save money and to get a better deal can make a big difference in the long run.
So if you need to send a business international money transfer, it’s crucial that you can find the best exchange rate for your transaction. To do that, you need to understand the factors that affect international exchange rates so that you can lodge your transfer at just the right time to take advantage of a high rate.
The best time for your business to send an international money transfer is simply when the value of the Australian Dollar (AUD) is at its highest. For example, if you’re changing money from Australian dollars to US dollars and the current exchange rate is AUD$1 = US$0.74, waiting for the rate to rise to AUD$1 = US$0.76 will mean you get much better value for your money.
Of course, if you want to transfer money back to Australia from a foreign country, the flipside applies. By waiting for the value of the Australian dollar to reach its lowest point, you will get the best deal on your transfer to Australia.
Because it can save you a whole lot of money. The higher the value of the Australian dollar relative to the local currency in the country you’re sending money to, the more money you will save.
Even a slight variation in the exchange rate can make a big difference to the total cost of your transfer, especially if you’re sending large amounts of money.
As an example, let’s assume you need to send AUD$50,000 to the UK. The table below shows the cost of the transaction if you were to send your international money transfer when the exchange rate was at three different levels:
|
|
|
All of these exchange rates were available at different times throughout the 2016/17 financial year. While a maximum variation of GBP£0.05 might not sound like much on paper, it can make a difference of thousands of pounds to the total cost of your transaction.
As the table below shows, by sending AUD$50,000 overseas when AUD$1 is worth GBP£0.62 instead of GBP£0.57, you can send an extra GBP£2,500.
Transfer A | Transfer B | Transfer C | |
---|---|---|---|
Exchange rate | AUD$1 = GBP£0.57 | AUD$1 = GBP£0.60 | AUD$1 = GBP£0.62 |
Transfer amount | AUD$50,000 | AUD$50,000 | AUD$50,000 |
GBP received | GBP£28,500 | GBP£30,000 | GBP£31,000 |
Extra money sent (compared to Transfer A) | - | GBP£1,500 | GBP£2,500 |
Take a look back at the history of the value of the Australian dollar relative to other currencies and it’s easy to see that exchange rates fluctuate all the time. Changes don’t occur just from month to month or week to week. Rates can experience significant upwards and downwards movements on any given day.
The list of factors that can influence the exchange rate between any two currencies is an extensive one. We’ve included some of the main factors that can drive rates up or down in the list below, but it’s worth remembering that exchange rates reflect the value of two separate currencies, so events and developments in both of those countries can have an impact on the value of their respective national currencies.
Bill is an Australian business owner who wants to buy US$20,000 worth of equipment from a company based in the United States. As the equipment is not needed urgently, Bill decides to bide his time and wait for the most attractive AUD/USD exchange rate to become available. The chart below shows the performance of the AUD/USD rate in the year leading up to 16 May, 2017. As you can see, the best time for Bill to send his transfer was in November 2016, when the exchange rate was AUD$1 = US$0.775. Other reasonable times to send were in October 2016 and March 2017, when AUD$1 = US$0.772. This is a far cry from the exchange rate in December 2016 when the value of AUD$1 dropped to US$0.716. The table below shows the amount of money Bill could have saved by sending the money when the AUD/USD exchange rate was at its highest as opposed to sending the transfer when the rate was at its lowest. By sending the money in November when the exchange rate peaked, Bill could have saved a massive AUD$2,126.51 and still have sent the same amount of US dollars to buy the equipment. Retail outlets are shuttering but online transfer volumes rise. Coronavirus uncertainty reigns in the markets, overshadowing small gains. Australia's main exports are hit hard by coronavirus, while demand for the perceived safety of the greenback may continue growing. AUD may be on the cusp of a new historic low as the Reserve Bank lays out its plans. Foreign exchange specialist Chris Broadfoot gives us the lowdown on how Australians could be affected by Brexit. Can you end up with more money than you started with after a money transfer?Bill transfers money to the United States
*Screenshot taken from xe.com, 16 May 2017
November 2016 December 2016 Exchange rate AUD$1 = US$0.775 AUD$1 = US$0.716 Transfer amount USD$20,000 USD$20,000 AUD needed to send USD$20,000 AUD$25,806.45 AUD$27,932.96 Money saved AUD$2,126.51 - You may also be interested in
How coronavirus is changing the way we transfer money overseas
Australian dollar makes rebound, but pandemic fears continue
Analysts: Australian dollar could drop further
Australian dollar drops to 10+ year lows as RBA announces quantitative easing
Money, travel, trade – what does Brexit mean for Australians?
Western Union is now offering ridiculously cheap money transfers via POLipay
Other factors to consider when choosing a transfer provider
The exchange rate isn’t the only thing you need to consider when sending money overseas. Keep the following factors in mind when comparing money transfer providers:
One final piece of advice for any business that regularly sends money overseas is to consider opening a foreign currency account. This allows you to hold money in another currency and then convert it into Australian dollars when a favourable exchange rate becomes available.
Get $250 credit back when you meet the eligibility requirements and 55 days interest-free on purchases.
The broker is offering US shares for a flat $9.50 fee. So how does it stack up to CommSec or CMC Markets?
Our guide to setting up a business administration business.
Get set up to provide support services remotely with our guide to launching a virtual assistant company.
Find out everything there is to know about the online dating site, Christian Cafe.
This low rate credit card has a $0 annual fee and is available to firefighters and other service workers or volunteers.
A low rate platinum credit card that includes a cashback offer and perks such as complimentary travel insurance and purchase insurance.
The St.George Vertigo Platinum card offers a $300 cashback offer, up to 55 days interest-free period and a 12.99% p.a. interest rate on purchases.
Get your credit card debt sorted before the holiday season and save on interest for up to 30 months with one of these credit card offers.
The Harvest Finance hack is an excellent show of DeFi's problems, solutions and entertainment value.