International Money Transfers: How to Feel Safe and Secure
When operating outside your domestic market, you want to make sure you’re getting the best deal possible - in a safe and secure environment
Businesses are no longer confined to the restraints of operating within domestic markets and are now more global than ever before. Whether individuals are seeking a better work/life balance or want to take advantage of development opportunities abroad, many organisations are now working on an international scale. But with these newfound opportunities and practices comes a new way of working, including the need to send money abroad.
It’s widely reported that the banks aren’t the best option when you want to transfer money abroad – slow business practices and high fees are just two common complaints. Aside from transferring money, you’ll also need to consider setting up a bank account and whether you require debit or credit cards for costs such as expenses.
With so much to take into account, we’ve found out from Imperial FX what businesses need to know.
Understand financial terminology
Fee: This will be an upfront amount that you will be required to pay to send your money abroad. This amount can apply to both the sender and recipient.
Fees are also associated with any foreign bank account that you set up for your business. These charges can be applied to transactions you complete regularly, whether you choose to receive statement in print or digitally and who you choose to manage your account. If you choose online or telephone banking, then you are likely to see a drop in fees.
Digital payments are often subjected to reduced fees. However it’s best to check with your provider before you complete a transaction.
Exchange rate: This is often seen as a ‘hidden charge’, as some providers won’t announce daily rates which means it’s hard to get hold of the exact rate. Often, companies claim to be ‘commission-free’ and hide charges in the exchange rate.
A small fluctuation in a currency can cause a big hit in your business, therefore staying up to date with exchange rates is a must for any business owner or financial director. Ideally, you should look to partner with a provider who has a ‘tight spread’. This means that the buy and sell rate has the smallest margin possible, making it a more cost-effective option for the consumer.
Forward foreign exchange rate: This secures an exchange rate when you change a set amount of money at a future date. Protecting you against currency changes, this can help businesses to budget accordingly providing they want to proceed on the date they have previously set. However, there is the risk that rates could change which are more favourable.
Authorised: Those who trade over £2.5m per month, are required to be authorised by the Financial Conduct Authority (FCA). This means at the close of business each day, these firms separate your businesses or personal money, from the firm’s own account. Therefore, protecting your cash, if the firm ever has financial difficulty. You can search on the FCA register if you are unsure of a business’s status.
Setting up a bank account
You will need to set up a foreign bank account to handle your business abroad. However, you should be aware that some countries require you to be a resident for a certain period of time. For example, the United States have strict laws in place which can make opening an account difficult to prevent money laundering.
In order to open an account you will need to provide the following; passport, identity card or driving licence, proof of address and any immigration documents you have. You may be required to present more documentation than this, however this should provide a rough guide as to what you can expect.
Sending money abroad
Before you decide how to send your money abroad, it can be worth considering the following as it may affect the method that you use.
For example, how much are you sending? What fees are associated? Is it a regular payment? How does the person/business want to receive it? When do they need to money?
Compare the exchange rate you are being offered with other providers. There are a number of sites such as Reuters which list this information. However, it’s also worth remembering that not all providers may be included.
To send money abroad you have three main options to choose from; bank or building society, foreign exchange broker, or a high-street transfer business such as Imperial FX. This is where you will also want to check if the firm is registered with the FCA.
Checking online security
With so many business practices now relying upon online services, ensuring that your transactions are secure should be of the highest importance.
Always check that the padlock or key symbol in the corner of your browser is unbroken, and that your website link displays ‘https’ rather than ‘http’.
You should also take care to avoid using unsecure w-fi connections, leaving your device unattended or falling into the scam trap. Always be wary of unsolicited emails – remember, it it’s too good to be true, then it probably is.
Operating a business abroad is no easy feat, but being prepared with your finances can help to make the transition and journey a smooth one.
Omar Mohamed is operations and financial marker analyst at Imperial FX.