Improve your bottom line by finding the best* exchange rate and fee-free transfers when you need to send money overseas.
In today’s increasingly competitive business landscape, finding every possible way to reduce costs is essential to survival and also success. For a financial controller in charge of managing an accounts department, one of the easiest ways you can minimise expenses is to rethink the way you send money overseas.
Whether you’re buying stock, paying suppliers or settling outstanding debts, by using an online transfer company instead of your bank to send money overseas, you could give your bottom line the lift it needs.
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|1 USD =||1.0000||1.3077 Inverse: 0.7647||1.2867 Inverse: 0.7772||0.8506 Inverse: 1.1756||6.6109 Inverse: 0.1513||0.7506 Inverse: 1.3324||64.0690 Inverse: 0.0156||19.1229 Inverse: 0.0523||50.4433 Inverse: 0.0198|
|1 AUD =||0.7647 Inverse: 1.3077||1.0000||0.9839 Inverse: 1.0163||0.6505 Inverse: 1.5374||5.0553 Inverse: 0.1978||0.5739 Inverse: 1.7423||48.9931 Inverse: 0.0204||14.6231 Inverse: 0.0684||38.5736 Inverse: 0.0259|
|1 EUR =||1.1756 Inverse: 0.8506||1.5374 Inverse: 0.6505||1.5127 Inverse: 0.6611||1.0000||7.7719 Inverse: 0.1287||0.8824 Inverse: 1.1333||75.3208 Inverse: 0.0133||22.4812 Inverse: 0.0445||59.3022 Inverse: 0.0169|
|1 GBP =||1.3324 Inverse: 0.7506||1.7423 Inverse: 0.5739||1.7143 Inverse: 0.5833||1.1333 Inverse: 0.8824||8.8081 Inverse: 0.1135||1.0000||85.3627 Inverse: 0.0117||25.4785 Inverse: 0.0392||67.2085 Inverse: 0.0149|
How can a financial controller use international money transfers?
As a financial controller, it’s your responsibility to make sure the accounts department runs as smoothly as possible. As well as reporting to management and overseeing all tax compliance issues, you’ll no doubt also be keen to find any way possible to help each business dollar go further.
One way you can do this is by finding a cheaper way to send money overseas. For example, you may need to send an international money transfer to:
- Pay an overseas supplier
- Buy business stock
- Settle an outstanding debt
- Pay overseas legal fees
- Pay for professional services
- Pay overseas staff
- Fund the expansion of your business
However, there are two extra costs you need to consider when sending an international money transfer:
- The exchange rate. The exchange rate you see in the financial report on the evening news is not the same rate you get for an international transfer. Instead, banks and other transfer providers add a margin on top of the interbank exchange rate before selling currency on to you.
- The transfer fee. Many transfer providers will charge a fee each time you send money overseas. This is usually a flat fee but is sometimes calculated based on the size of your transaction.
If you send international money transfers from your bank, you might be surprised to learn that there may be more cost-effective transfer options available. By comparing transfer providers and shopping around for the best exchange rate, you can greatly reduce the cost of sending funds overseas.
How can I find the best* exchange rate?
You need to pay an overseas invoice, so you set up an international wire transfer from your normal business bank account, right? After all, you have a good relationship with the bank, the money is ready to go and all of your business banking products are with the same financial institution.
Unfortunately, although this may be the most convenient option, it’s also often one of the most expensive. This is largely due to the low exchange rates banks offer to international transfer customers – by offering you an exchange rate well below the mid-market interbank rate, banks can take a larger share of your transfer amount. They also charge fees that usually range from around $15 to $30 per transfer, which can soon add up to a sizable amount if you’re regularly making overseas payments.
But there are now plenty of more cost-effective options for your international transfers. Recent years have seen the rise of several specialist online money transfer companies, including providers like WorldFirst, TransferWise and TorFX. Unlike the banks, which offer a huge range of financial products and services and have to cover the cost of maintaining branch networks, these businesses specialise in foreign exchange and are 100% online.
This means they have lower margins than the banks, which equates to better exchange rates for customers and substantial savings on your international transfers. Their fees are also minimal when compared to the banks, with some providers even offering fee-free transfers for large transactions.
So the next time your business needs to send money overseas, do a quick comparison to see how your bank compares to a couple of online transfer providers.
Bank vs online transfer providers
Nilmanie is the financial controller of an Australian construction firm that regularly sources supplies and professional services from overseas. Nilmanie has long been aware that the exchange rates on offer from her usual business bank are well below the mid-market rate, so she decides to look around for a better deal.
For a transfer of AUD$5,000 to the United States, Nilmanie compares her “big four” bank with two specialist online transfer providers. As you can see in the table below, by using online transfer company B instead of her bank, Nilmanie can send an extra US$194.50 to her recipient without paying any extra – in fact, she can actually save AUD$21 in transfer fees.
This shows just how vital it is to compare money transfer providers before sending any amount of money overseas. When you consider the extra money Nilmanie could send on a transaction of AUD$5,000, it’s clear that you could enjoy even greater savings on larger transfers.
|Bank||Online transfer company A||Online transfer company B|
|Exchange rate||1 AUD = 0.7016 USD||1 AUD = 0.7380 USD||1 AUD = 0.7405 USD|
|Difference in amount received compared to bank (in USD)||-||US$182||US$194.50|
How to compare transfer providers
As the case study above shows, comparing your options could help you find substantial savings for your next international transfer. Some of the factors you need to consider when choosing a transfer provider include:
- Exchange rates. The exchange rate can vary substantially between providers, and even a minor difference in the rate can have a huge effect on the total cost of a transfer. Compare exchange rates across a range of providers and make sure any rate you are quoted is the customer rate, not the interbank rate.
- Transaction fees. Consider how much each provider will charge you for sending a transfer. Remember also that some companies offer fee-free transfers if you’re sending a large amount of money.
- Transfer time. Next, compare how long it will take for the money you send to be accessible in your recipient’s bank account. You want to ensure that all your bills will be paid on time, so make sure all transfers will be processed as quickly as possible.
- Flexible transfer options. You may also be able to benefit from a range of other flexible transfer options that some providers offer, such as:
- Recurring payment plans.Save time by setting up regular payments in advance. However, make sure you’re aware if there is any extra fee attached to this service.
- Forward contracts. These handy transfer tools provide protection against a falling exchange rate, allowing you to lock in a rate now for a future transaction.
- Limit orders. With a limit order you can specify your desired minimum exchange rate for a transfer – when the rate becomes available, your transfer will be automatically sent.
- Currencies supported. Make sure that any transfer provider you choose offers support for any currencies you need to access.
- Personal account manager. You could also benefit from having a personal manager assigned to your foreign exchange account. This will ensure that you can always access advice tailored to your needs.
- Customer support. Finally, check to see whether the provider offers an online help centre, and if you can access phone, email and live chat support if required.
Definition: Best* exchange rate
There is no single best exchange rate, and the best exchange rate for you may not be the best for someone else. This is because there are other factors to consider when sending an international money transfer in addition to the exchange rate, including the transfer fees, the payment method, the speed of delivery and the level of customer service. One person may need to transfer money within 24 hours, while others may have no time frame, which may affect the exchange rate. Exchange rates are also affected by wider economic factors. Previous performance isn't an indication of future performance. You should consider a range of products when deciding which provider is most suited to your personal money transfer needs.
By taking the time to compare several providers before sending money overseas, you will be able to send fast, convenient and affordable international transfers.