Your choice of money transfer service is an important business decision
If your business revenue is dependent on international money transfers, it’s important that you find the right provider. This is because a lot of your business’ money will flow through those transfers, and unfavourable exchange rates or hidden fees might take a bite out of your profit margin.
It can be a good idea to choose your money transfer service in the same way you would carefully select any vendor or other essential service provider. If you’re using your current bank for transfers, there’s a good chance your business isn’t as profitable as it could be.
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How an international money transfer service can make your business more profitable
If your business sends money overseas then international exchange rates might be a considerable business expense, eating away at the margins of each transaction. However, you won’t get the same rates with all providers, and simply looking for the best exchange rates can be an effective long-term way of boosting profitability.
You can couple this with limit orders, which alert you or let you automatically schedule future transfers when the market exchange rate hits a level that is acceptable for you.
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Is it worth using multiple transfer services?
Sometimes it might be a good idea to use more than one transfer service, depending on the type of transaction. This can be relatively easy with independent services where you can link to most types of bank accounts, but might be more difficult if you’re still using your bank to make international transfers.
- You may be able to find lower exchange rates at the cost of a higher transaction minimum. It might be a good idea to open this type of account to get preferable rates on larger transactions.
- You may be able to find zero fee transfers at the cost of higher exchange rates. This type of account may be well-suited for many smaller transactions.
If you’re doing international business money transfers through your bank, you might simply be spending much more than you need to on foreign currency transfers. Compare your current rates with the rates of other providers to see if this is the case.
Preferable exchange rates are a good starting point for deciding on an international currency transfer service, but before settling on any one option it can be a good idea to consider the benefits available in line with what’s right for your business’ needs.
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How to compare international money transfers for SMEs
Once you’ve found the best exchange rates, you might want to start looking at the other benefits. Which of the following can your business take advantage of?
Low or no fees
A different fee structure might be preferable depending on what type of transfers you tend to make.
Zero fee transfers
Eligible transfers of certain amounts, depending on the currency type and other factors, might be sent with no fees at all, and have no costs other than the exchange rate.
If you’re making numerous small transactions, a fee structure based on percentage can be very affordable.
These may be well suited to keeping costs down on larger transactions.
Take advantage of the flexibility offered with pre-scheduled payments, and consider combining it with limit orders to make effective budgeting easier, even across variations in exchange rates. In addition to allowing closer control of transactions, this can also be a straightforward time-saver.
Online money transfer services can deliver added functionality when tracking payments, including automated alerts and confirmations, to help you keep meeting the needs of your customers and service providers around the world.
Case study: How Lee boosted his profit margins
Lee, proud owner of a shop in Sydney, was making monthly payments of $15,000 to his primary overseas supplier in the United States. Since starting the business, he had been using his bank to make all these transfers with a $25 fee each time, and with exchange rates of 0.83 Australian dollars for every US dollar. One day he decided to look for a better deal, and managed to find an international transfer service with no fees on transactions above $10,000 and an exchange rate of 0.87. He drew up a table to compare them.
|AUD$15,000||Bank||Money transfer service||Money transfer service with limit order|
Simply by using a currency transfer service Lee had gone from a 0.83 exchange rate to a 0.87 exchange rate and was saving over $600 a month from this alone.
By also setting up a limit order, alerting him when the exchange rate reached 0.89, Lee was able to wait until the rates were even more favourable before making the transfer, saving an additional $300 or so, even after the $15 limit order service fee.
With one simple change, Lee had made a big difference to his profit margin.
Most owners of small- and medium-sized businesses can appreciate the importance of keeping costs down. When the margins are tight, there’s no need to waste money on unfavourable rates.
Compare SME money transfer services to see if you can reduce costs by signing up.