By shopping around for the best exchange rate, your business could save thousands of dollars.
Sending an international money transfer can be an expensive exercise, especially if you’re transferring a large amount. Poor foreign exchange rates and high transfer fees can see the banks take a big chunk of your transfer amount, which means a raw deal for you and a big hit to your business’s bottom line.
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|1 USD =||1.0000||1.3288 Inverse: 0.7525||1.2868 Inverse: 0.7771||0.8513 Inverse: 1.1747||6.3859 Inverse: 0.1566||0.7461 Inverse: 1.3403||68.1215 Inverse: 0.0147||19.9642 Inverse: 0.0501||52.4325 Inverse: 0.0191|
|1 AUD =||0.7525 Inverse: 1.3288||1.0000||0.9684 Inverse: 1.0327||0.6406 Inverse: 1.5610||4.8057 Inverse: 0.2081||0.5615 Inverse: 1.7811||51.2640 Inverse: 0.0195||15.0238 Inverse: 0.0666||39.4574 Inverse: 0.0253|
|1 EUR =||1.1747 Inverse: 0.8513||1.5610 Inverse: 0.6406||1.5116 Inverse: 0.6616||1.0000||7.5014 Inverse: 0.1333||0.8764 Inverse: 1.1410||80.0206 Inverse: 0.0125||23.4514 Inverse: 0.0426||61.5911 Inverse: 0.0162|
|1 GBP =||1.3403 Inverse: 0.7461||1.7811 Inverse: 0.5615||1.7247 Inverse: 0.5798||1.1410 Inverse: 0.8764||8.5591 Inverse: 0.1168||1.0000||91.3037 Inverse: 0.0110||26.7581 Inverse: 0.0374||70.2757 Inverse: 0.0142|
So if you need to send money overseas to pay for wholesale purchases, comparing money transfer providers to find the best exchange rate could save you hundreds or potentially thousands of dollars. Let’s take a closer look at why it’s so important to lock in a great exchange rate and how you can find the best value for money when transferring funds overseas.
Using an international money transfer to pay for a wholesale purchase
Australian businesses across an extensive range of industries need to look overseas to source inventory. This is particularly true for e-commerce stores, who purchase wholesale goods from overseas suppliers because they can buy in bulk and receive a discounted rate.
But in order to pay for an overseas wholesale purchase, it’s crucial to find the most affordable way to fund the transaction. You’ll need to send a large amount of money overseas to pay the supplier, and the best way to do that is to send an international money transfer.
Unfortunately, the low exchange rates and high fees offered by some transfer providers can make sending money overseas an expensive business – especially if you’re talking about purchasing tens of thousands of dollars of stock for your business. That’s why it’s essential to shop around and find the money transfer provider that offers the best exchange rate and lowest fees on your international money transfer to purchase wholesale items.
Why is it important to find the best exchange rate?
Quite simply, the higher the exchange rate you get for your transfer, the more money your business will save. The more units of foreign currency you’re able to purchase with your Aussie dollars (AUD), the bigger the boost for your bottom line.
Even a seemingly small difference in the exchange rate can have a huge impact on the total cost of your transfer. As an example, let’s say you need to make a wholesale purchase from the United States. Transfer Provider A offers an exchange rate of 1 AUD = 0.72 USD, while Transfer Provider B offers a rate of 1 AUD = 0.74 USD.
A couple of cents’ difference doesn’t sound like much, but if you’re sending AUD$10,000 overseas you can send an extra USD$200 simply by choosing the higher exchange rate. And the difference only gets bigger if you send a larger amount of money:
- If you send AUD$25,000, the higher rate means you send USD$500 more
- If you send AUD$50,000, you can send USD$1,000 more
With this in mind, it’s easy to see why finding the best exchange rate for your international transfer is so important.
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Banks vs money transfer providers – which is better?
Whenever they need to send money overseas, many businesses don’t even think to compare their options. After all, if you do all your business banking with the same bank, surely they’ll be willing to offer you the best available deal for your international transfer, right?
Unfortunately not. Once they’ve skimmed their own margin off the top, banks offer exchange rates that are a long way below the inter-bank rate (the rate at which banks buy and sell currency from one another). Their transfer fees can also be unnecessarily high, meaning your business takes another financial hit it simply doesn’t need to.
If you want the best exchange rate for your business money transfer, instead of using the banks you should consider the services of dedicated money transfer providers. These companies specialise in foreign exchange, trading much larger volumes of currency than the banks and with much smaller margins.
And this is good news for you, as these transfer companies offer significantly better exchange rates than the major banks. They also tend to charge lower transfer fees, and may even waive their fees altogether if you’re transferring a large amount of money.
Shopping around for the best exchange rate
Dominique needs to buy £30,000 of office furniture and equipment from a supplier in the UK. She initially plans to send the necessary funds overseas via international wire transfer from her business account with a major Australian bank, but decides to see if it’s worth using a different transfer provider that offers a better exchange rate.
Dominique compares her bank’s transfer service with a specialist money transfer provider. As you can see below, the better exchange rate means Dominique can save a massive AUD$3,037.60 by sending the funds through a specialist money transfer service. She can also save a further $18 on transaction fees.
|Bank||Specialist money transfer provider|
|Exchange rate||1 AUD = 0.541 GBP||1 AUD = 0.5724 GBP|
How to compare money transfer providers
Even once you’ve decided to use a specialist money transfer service instead of your bank, it’s still important to compare a range of providers to find the best deal. Make sure to look at:
- Exchange rates. While the differences in rates between specialist providers aren’t as large as when comparing with banks, you could still find a substantially better rate at one specialist company over another. Obtain quotes from multiple providers to see who offers the best value for money.
- Transaction fees. As part of each quote, make sure you’re provided with an accurate reflection of the fee attached to your transfer. Every dollar counts, so remember to include transaction fees in your calculations of the total cost involved.
- Fee-free thresholds. Many transfer providers will waive their transaction fees when you send a large amount of money, which can be an especially handy feature when funding big wholesale purchases.
- Supported currencies. Make sure that any provider you choose allows you to send transfers in any currencies you are likely to use.
- Turnaround time. Check with each provider for details on how long it will take for the money you send to arrive into your supplier’s bank account. If fast payment is crucial, this could have a big impact on your choice of provider.
- Flexible transfer options. Does the provider offer flexible options to help you save time and money when making overseas wholesale purchases? These may include:
- Regular payments. Can you set up a recurring transaction that allows you to make regular payments to a supplier?
- Limit orders. Can you specify your desired exchange rate for a particular transaction, and then allow the provider to monitor foreign exchange markets and automatically execute the transfer when your desired rate becomes available?
- Forward contracts. Can you lock in a good exchange rate now for a transfer that will take place in the future?
- Customer service and support. If you’re sending large amounts of money, the knowledge that you can speak to a foreign exchange dealer whenever you need provides added peace of mind. Phone, email and live chat support, as well as online educational resources and learning centres, can also help you reduce your exposure to risk when sending money overseas.
By thoroughly comparing transfer providers and searching for the best value, you can enjoy big savings and take the stress out of making overseas wholesale purchases.