In this guest post, the global money transfer specialists at OFX break down some of the best ways to increase profitability thanks to cost controls when doing business overseas.
In the highly competitive Amazon landscape and with additional challenges from the global pandemic, every business is aiming to increase its profitability.
To offer some guidance in these uncertain times, we have compiled some of the less obvious considerations to help businesses strategize ways to come out ahead by controlling costs. Keep reading to discover four ways to protect your margins.
Getting a good rate on your international money transfers can have a major impact on your bottom line. An international money transfer can be made by going to a bank or to a foreign exchange specialist. It is likely that either option will charge for the service by adding a “margin” or percentage to the daily "market" rate, also known as the mid-market or wholesale rate for exchanging currency.
This is often the point where you either save some money or lose it. But while big banks and other providers add high margins, experienced specialists like OFX can offer more competitive exchange rates — sometimes lower by as much as 50%.
The rate itself may not appear to have much of an impact on your transfer, but when you look at the bigger picture it could be what separates profitability and loss.
You could be facing repeat global payments if your business has employees or suppliers located in different countries. OFX’s regular payment and Forward Contract tools can help protect against exchange rate fluctuations and give your business cash flow certainty. OFX delivers payments fast without a high price tag for your business.
When you make business transactions in your own country, the laws and regulations can easily be anticipated. It's a different story when you go overseas. Import fees and taxes can leave you exposed to unanticipated charges.
For example, if you are operating in Canada, you likely do business in the US and maybe with Europe — both have very different requirements for imports which simply creates more work. To avoid payment delays, make sure you supply the proper contact information and consider setting up bank-to-bank transfers.
As a global business, you’ll be subject to some degree of currency risk. Depending on the size and frequency of your international payments, increasing profitability likely means reducing your currency risk exposure. Whether you’re an importer making overseas payments to your supplier or an exporter with your sights set on overseas expansion, managing your currency risk exposure could make all the difference.
The markets typically move according to key geopolitical events, such as Brexit or the US election. Therefore, depending on what you are transferring from or to (i.e. your preferred currency pair) you are likely facing more market volatility and increased risk. The reality is, greater growth often comes with greater risk. This holds true whether you’re exchanging currencies, trading stocks, or investing in real estate.
Profits can come from managing expenses within your control. Understanding cost controls in international marketplaces makes it easier to know how to protect your bottom line. Thinking about your currency strategy and partnering with a global money transfer specialist like OFX can really help!
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For VIP Services, contact Will Moffett at will.moffett@ofx.com or by calling (925) 209-1648.
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