There are many reasons why you may need to make overseas payments, for example:
- The purchase or sale of an overseas property
- Sending or receiving an inheritance
- Receiving regular payments such as salary/ pensions from abroad
- International business acquisitions/ costs
- Trading internationally
- The management of trust funds
- Sending money to relatives overseas
- Repatriation of foreign assets
- Payment of legal or other fees of overseas professionals.
These payments will usually include converting the money into a different currency. By treating these overseas payments in the same way as other single currency payments, you may be costing yourself hundreds if not thousands of pounds.
Are you losing money on your currency exchange?
The rate of the currency exchange can have a massive impact on foreign payments however it is often a forgotten aspect amidst all of the excitement of buying a property or business or lost in the admin of dealing with the administration of an estate with overseas assets.
When making payments overseas many people often just blindly entrust the transfer to their bank allowing them to convert their payment into the required currency without considering the rate offered by the bank and the impact this could have on the overall costs of this.
Exchange rates are one of the ways in which High Street banks make enormous profits at the expense of their customers (this includes business customers and other customers told that they will be receiving “preferential rates”).
Most banks will set an exchange rate at the start of the day and don’t alter it regardless of what happens to the rate of exchange. These rates tend to already be uncompetitive and may also be accompanied by huge commission charges just to transfer the money. This rarely achieves the best result for you and can often end up costing you significant sums.
The best way to send money abroad/ receive money from abroad
It is highly advisable to make the transfer through a recommended currency specialist rather than making the transfer through the banks.
One of the reasons for this is that the exchange rates offered by foreign currency brokers are much more competitive than the rates of exchange offered by the banks, often by a considerable amount.
A currency specialist can also save you further money when compared with the banks as they don’t charge the excessive fees that the banks do just to transfer funds.
The reason that currency specialist companies are able do this is due to the volume of foreign transfers they make and the fact their sole aim as a business is to offer superior exchange rates compared to the banks. They can typically save around 3-5% of the transfer value when compared to the banks.
Foreign currency specialists can help in a number of additional ways too. For example they can arrange to set sterling budgets and rates for your transfer so you will know exactly how much will be transferred at a given time without leaving matters to the mercy of the fluctuations at the time of the transfer.
Currency Specialists Vs High Street Banks
You are buying a property in Spain for €200,000 but your funds are in GBP. So you will need to convert your GBP to pay the €200,000.
|High Street Bank Rate||Currency Specialist Rate|
|Amount to be paid in €||€200,000 @ 1.36||€200,000 @1.39|
|Total Cost in £||£147,058.82||£143,884.89|
By using a bank instead of a currency specialist, your would have paid £3173.93* more for the property.
You are due to receive $100,000 inheritance from Australia in to your UK GBP bank account.
|High Street Bank Rate||Currency Specialist Rate|
|Amount to be received in $||$100,000 @ 0.4910||$100,000 @ 0.5122|
|Total Received in £||£49,108.50||£51,220.00|
By using a currency specialist instead of a bank you would have received an extra £2111.50*
*Exchange rates are subject to change but figures are taken during May 2015.
As set out in the examples above, a small amount of research and planning can make a vast difference to the amounts actually received or the amount to be paid to satisfy the required amount.
Using a recommended foreign exchange specialist is not only cost effective but also very time efficient. You can set up an account and sent a payment within minutes. It is simply a case of transferring funds to a this separate account where the money can be exchanged and the relevant currency forwarded on to the desired account.
It is however recommended to contact a currency specialist as soon as you know you will need to make or receive an overseas payment as a good currency specialist will also be able to advise you regarding the timing of the transfer to help you get the most from your money. A good currency specialist will also be happy just to give you some information about how they can help.
For details of a recommended currency specialist and to discuss how they can assist you, please get in touch with Worldwide Lawyers on 01244 470339 or email us at firstname.lastname@example.org.