Wayne Mitchell of specialist currency exchange broker Baydonhillfx explains how the business helps SMEs.
In the modern global economy, more and more businesses are sourcing or selling goods and services overseas. This means that many companies are finding they need to make or receive international payments and exchange currencies.
Many business owners rely on and trust their banks to offer them the best rates of foreign exchange, but in reality this is not always the case. This is particularly pertinent in the current economic environment, where value for money is at the forefront of most peoples' minds. There are also obvious limitations in the level of personal service that the major banks are able to offer – a 'one size fits all' service might not be what you're looking for to meet your business needs. So what's the alternative?
SMEs are increasingly turning to specialist currency exchange brokers for a wide range of money and time saving services such as online currency transaction systems and a personal service from a currency dealer.
As a specialist broker, we have visited over a thousand SME owners over the last 12 months and found that around 75% were unaware that they could get better rates of exchange than those quoted by their bank. One business owner saved over £100,000 by using a personal currency dealer to monitor the rate of exchange on the US dollar. Specialist brokers also offer products such as forward contracts, which enable you to secure exchange rates at an agreed level for up to 12 months, minimising your exposure should the market take a downward turn.
Industry knowledge and understanding of currency market fluctuations are obvious benefits of using a specialist broker. We share this knowledge with our customers via daily and weekly market reports (see extract) that provide an overview of the economic outlook as well as highlighting opportunities for currency hedging.
Regardless of the economic outlook, choosing a specialist to help with foreign currency exchange can play a big part in the success and long-term prosperity of SMEs doing business overseas.
Forex market report extract (Courtesy of Baydonhillfx)
Budget deficits for many developed countries stand at record levels due to demand factors during the 'boom' years and the unprecedented support provided to the financial industry. Greece has recently brought the issue of government debt into focus as an example of the risks faced by most of the developed world. The impact on the euro region and the euro as a currency has been quite obvious; the single currency has depreciated significantly versus the US dollar in 2010. The pressure on Greece and other governments to bring their sovereign debt to more manageable levels has intensified. As a significant trading partner to Britain the crisis in Europe has had a knock-on effect on the value of sterling. Risk aversion amongst institutional investors has seen the US dollar appreciate against the pound in a similar fashion to the euro.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.