If your business buys or sells goods or services overseas, chances are you’ll be dealing with international payments.
When you’re running a small business with limited resource, currency payments can be challenging to navigate – causing many SMEs to miss out on opportunities for growth.
Moving money around the world should be simple and accessible for every business.
Read our handy guide and learn how to save time
and money when receiving or sending money abroad.
Currency exchange for small business
What you need to know.
What is an exchange rate?
An exchange rate is the value of trading one currency for another. This rate directly impacts the cost of all goods and services for individuals and businesses.
What is foreign exchange?
Foreign exchange. FX. Currency transfers. Cross-border payments. Foreign exchange (FX) is the conversion of one currency to another. It is the economic process that makes all international payments possible.
What is the foreign exchange market?
The ‘foreign exchange market’ refers to the global online network of brokers, banks and financial service providers who offer exchange rates. Rates are not controlled by a central body but determined by a number of factors, including market supply and demand, economic indicators, geopolitical events, interest rates, and central bank policies.
How does the exchange rate affect my small business?
Currency exchange rates can have a fundamental impact on your profits. Whenever you exchange one currency for another, you risk losing value of the money along the way.
When is the best time to make or receive currency payments?
Ideally, you want to send money abroad when your local currency (GBP) has the highest market value or buying power against that particular currency. Online exchange platforms, like EAKO, can help you understand the live exchange rate and automatically alert you when the rate is favourable for your needs.
How long do international payments take?
The exact time will vary for each transaction, depending on the service provider and cut-off times of the local banks involved.
With EAKO, transactions can be processed swiftly, often within minutes, depending on the type of transaction and market conditions. They are usually processed next working day or faster. Once received, funds are credited to your account within an hour.
What is a ‘fixed’ exchange rate and why might I need it?
Currency exchange rates are not static, they constantly fluctuate based on market supply and demand. A fixed rate option allows business to have more certainty and control over their currency costs, by setting an agreeable rate for a period of time in the future - from three months to two years.
Should I use my business bank to make currency payments?
Most retail banks and FX brokers typically charge high fees on foreign exchange and international money transfers. You can often save money on your currency transactions and access better exchange rates by using a multi-currency account with EAKO or another service provider.
How can I save money on currency payments?
While currency risk and costs can never be entirely avoided, you can take steps to protect your profits and get the most value as you move your money around the world:
Plan for your currency needs
Takeaway the guesswork with a proper currency plan.
An FX strategy should always be tailored to your specific business needs. For example, do you deal with one or many currencies? Is speed of transfer more important than cost?
Once you are clear on your needs, it becomes far easier to select a product or service to match your needs. Our experienced team can discuss solutions.
Be clear on fees and costs
You should always be clear on what any currency exchange solution or product will cost your business - before signing up! These fees can seriously impact your company’s profit.
Most providers will charge fees on the both the currency you exchange and the money transfers you make. Some may also charge to create and use an online multi-currency account.
Creating an account with EAKO is free, and you can find our typical fees here.
Use online exchange rate tools
Takeaway the guesswork with a proper currency plan. An FX strategy should always be tailored to your specific business needs. For example, do you deal with one or many currencies? Is speed of transfer more important than cost?
Once you are clear on your needs, it becomes far easier to select a product or service to match your needs. Our experienced team are always happy to discuss solutions.
Open an online multi-currency account
In most cases, creating your own multi-currency account will help your small to medium sized business save money on all aspects of currency exchange and global payments.
With EAKO, creating an account is free - and, alongside significant cost savings, you will access a wide range of FX products covering more than 130 currencies, as well as advice backed by more than 50 years of collective FX expertise.
Use time to your advantage
You can ensure your currency transfer is completed quickly and at the expected rate by transacting at the times when banks and other payment services operate.
When trading across borders and time zones, it’s worth considering when business hours end in your destination country.
How can SMEs benefit from using online FX services?
Small to medium businesses can reap huge advantages by finding a reputable online FX service. Here are some example scenarios drawn from EAKO’s experience with companies trading internationally.
Industry: Fashion Retail
Scenario: A UK-based fashion retailer manufactures its seasonal collections in Turkey, requiring invoices to be settled in Turkish Lira (TRY).
Challenge: The retailer faces fluctuating exchange rates, making it challenging to predict costs accurately. Paying suppliers at unfavourable rates increases manufacturing costs and reduces profit margins.
Solution: By using an online currency exchange platform such as EAKO, the retailer can monitor exchange rates and transfer funds when the GBP/TRY rate is at the best possible rate.
Outcome: The retailer successfully reduces manufacturing costs by 5%. This improved cost management allows the retailer to offer competitive pricing while maintaining healthy profit margins.
Sending money abroad at the best rate
Industry: Online Marketplace
Scenario: A UK-based online marketplace sells handmade crafts from artisans around
the world. Customers make purchases in various currencies, including USD and EUR.
Challenge: The company incurs high conversion fees and loses money on unfavourable exchange rates when converting foreign currencies to GBP through its business bank account.
Solution: The marketplace uses an online currency exchange platform to receive payments in multiple currencies and hold these funds in a multi-currency wallet.
They set up alerts choose the optimal time to convert these currencies to GBP, minimising conversion fees and maximising their revenue.
Outcome: The company saves 3% on annual conversion costs, boosting revenue and allowing the business to invest in an expanded product range and increased marketing.
Getting maximum value when receiving international payments
Industry: Digital Marketing Agency
Scenario: A UK-based digital marketing agency works with freelancers and subcontractors from various countries, including India, the Philippines, and the US. Payments need to be made in INR, PHP, and USD.
Challenge: Making individual payments through traditional banks incurs high fees and administrative burdens. The process is time-consuming and costly.
Solution: The agency switches to using an online currency exchange platform to make mass payments in different currencies, directly to the freelancers’ accounts.
Outcome: Payment processing costs reduce by 4% and significant admin time is saved, allowing the agency to focus more on client projects and business growth.
Making mass international payments
Industry: Wholesaler
Scenario: A UK-based wholesaler imports goods from China and sells them in Europe. The distributor needs to predict costs and set prices several months in advance.
Challenge: Unpredictable exchange rates between GBP, CNY (Chinese Yuan), and EUR make it challenging to maintain stable profit margins.
Solution: The company uses forward contracts through an online platform to lock in exchange rates for future transactions. This protects against unfavourable rate changes and ensures predictable costs.
Outcome: Cost structures are stabilised and profit margins secured. Over the course of a year, this strategy helps the company avoid a 6% cost increase due to currency fluctuations, ensuring consistent pricing and profitability.
Fixing an exchange rate to protect the bottom line
Industry: Import/Export Company
Scenario: A UK-based import/export company trades goods with partners in Asia and Europe. Timely payments are critical for maintaining strong supplier relationships and ensuring smooth operations.
Challenge: Delays in confirming payment receipts through traditional banks cause uncertainty and disrupt the supply chain.
Solution: By using an online platform with real-time payment tracking, the company can monitor the status of international payments immediately.
Outcome: The company gains real-time visibility into payments, improving supplier trust and ensuring timely shipments. This leads to a 10% increase in operational efficiency and better inventory management.