Send money abroad and make fx payments with ease, with your personal, dedicated corporate FX dealer.
If you are an internationally-trading business, either by importing or exporting goods or because you pay for services abroad, you need a reliable foreign exchange partner that will help you achieve the best foreign exchange rates possible. A foreign exchange dealer with a corporate FX department can help you:
Send money abroad and make fx payments with ease, with your personal, dedicated corporate FX dealer.
Become more knowledgeable about currency trends, and be advised on when is the right time to make business money transfers
Become able to hedge foreign currency risks through FX options (like forward contract).
Pay wholesale prices on currency exchanges (i.e. find the best foreign exchange rates).
What are good money transfer options for international businesses? View our list below of the best foreign exchange companies, that are recommended for business currency exchange and deal specifically with Australian clients, or with overseas clients that require AUD business money transfers and hedging:
The most common misconception in the FX domain is that a business should be massive in size, in order to partake in the market. Most small businesses, in Australia, and globally, simply use their banks to make and receive international payments, without taking an active position in the market. This kind of approach leads to a great deal of waste, and can seriously damage businesses which are reliant on foreign currencies. Banks are non SME-friendly, because they are inflexible. Larger corporate clients will have access to the foreign exchange dealers, but smaller SMEs will not, and thus, as a small business owner – you would have to deal with your banker. A banker not permitted to give any special discounts on buying or selling currency. A banker that cannot offer Corporate FX options such as Forward Contracts. A banker who won’t follow the market on your behalf and make trades automatically at set rates.
Then the question still remains, are the biggest foreign exchange companies the best? The answer is not necessarily – it isn’t just as simple as the biggest foreign exchange companies being the best FX providers. A larger FX company should benefit from better access to liquidity (meaning cheaper FX rates and no issues for larger clients wishing to make sizeable business money transfers) and have a network of international bank accounts offering in-country, localised settlement. But, the best currency exchange companies (who we’ve listed here) will also have local servicing and in-country know-how, assisting businesses step-by-step through their business FX requirements.
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Corporate currency exchange specialists like the ones listed above, will definitely:
Success rarely comes without risk. As an experienced business owner, you’re aware of this. To win big, you’ve got to put your neck out there. However, this shouldn’t mean losing everything when things go sideways.
Black swan events happen, even when you use good economic prediction tools. Life is full of unpleasant surprises. When making business international transfers, your business should adopt a currency hedging strategy to guard against these risks. That way, when the market moves against you aggressively, you can limit your losses.
Currency hedging is a series of strategies meant to minimize business FX risk. Currency rates are not static – they move up/down not day-by-day or hour-by-hour, but moment-by-moment.
Market participants, be they day traders, the best corporate FX departments, or small businesses, can all be exposed to unexpected shifts in FX rates. A bad employment report, flash crashes, or a pandemic can cost significant amounts of capital.
To guard against these bad outcomes, firms that offer foreign exchange for businesses offer hedging tools. These include forward contracts, stop-loss orders, and limit orders.
To mitigate losses caused by unpredictable currency rates, the best business international money transfer companies offer Forex hedging tools. How do their clients use them?
For starters, many use forward contracts to protect their bottom line against unfavourable rate shifts. In FX, a forward contract is an agreement between two entities to purchase an agreed sum of currency in the future, at today’s exchange rate . The currency could be any -like the AUS, USD, EUR, or GBP.
The currency rate in a forward isn’t necessarily the best available rate between now and the day you’ve booked your forward contract for. Instead, you have completely hedged your position – you know exactly what rate you’re going to get. If you had waited to make a trade on the spot you may have got a better rate, , but likewise, should the market move against you, this tool will protect you from any downside too. At delivery time, a forward is a contractual obligation to make an overseas business money transfer at the agreed-upon rate in the forward contract.
Stop-loss orders are another tool traders use to limit downside risk. When set, a trade is triggered when the price of a currency falls to the noted rate, thereby avoiding a more devastating loss. There are downsides, though – a temporary dip can trigger a sale at what might end up being an unfavourable rate.
Forex hedging tools aren’t solely about reducing risk in business international transfers – you can also use them to exploit market movements. Limit orders are favoured for this purpose, as they only execute trades at a specific price. If the market moves in your favour, you can end up sending money from Australia for far less than you would expect. Similarly, you can receive cash at a much more profitable rate than usual.
Forward contracts provide a guaranteed rate for your company when making international money transfers in the future. For both you and the FX firm a bi-lateral agreement is made to purchase currency on a set date for a set amount in the future. If the market moves significantly against your currency pairing, FX firms are still obligated to pay you at the agreed-upon rate when you booked a forward contract.
Some customers, dismayed that the market has moved in their favour (between the date the forward contract was agreed and when it is set to value), may abandon their forward contract and look to trade at the improved rate on the spot. For this reason, FX firms require a security deposit of 10-20% of the transaction amount. Ensuring that both you and the firm will pay the agreed sum in the transfer. Your transfer provider will hold this fee in trust until the date of fulfilment. On that day, they release the deposit and use it in the agreed-upon transaction. You simply pay the remaining 80-90% of the contract.
Don’t be disappointed if an FX firm treats you this way. Often, money transfer providers, like OFX or WorldFirst, only impose this requirement on new or smaller customers. Once you have proven that you are a trustworthy actor, they may waive the need for a deposit on subsequent transactions.
There are dozens of corporate FX providers out there. However, not all offer currency hedging. As a business owner, you should be using firms that provide these corporate FX services.
We don’t say this just because they can save you money. To even offer hedging tools, the best corporate FX firms must satisfy stringent regulatory requirements. Ever since the Global Financial Crisis of 2008, financial services firms have been under intense scrutiny, with protecting customers more important than ever.
To pass inspection year after year, these firms have strict trading processes. Not only do they keep these operations in compliance, but they also offer expertise other firms can’t match. If you want to minimize risk as you build your business, you’ll want these folks on your side.
Finance can be a tricky subject at the best of times. Get a detail wrong, and you might lose out on profits. In worst-case scenarios, you could even take a significant loss.
In 2021, the stakes are higher than ever before. Market volatility has been wreaking havoc on currency rates. Under these conditions, an innocent mistake could lead to a loss from which you may never recover.
You can’t wing it anymore. Now, more than ever, you need expert counsel. Dedicated dealers provide this expertise, as they are well-versed in all things corporate FX.
Dedicated dealers are finance professionals who possess an in-depth knowledge of Forex markets. They keep a close watch on current affairs that could impact currency rates. With that in mind, they then use their understanding of economics to make recommendations to clients. They should also understand the global banking network and what happens behind the scenes when business international payments are made.
They also understand that every client is different. What works well for a Fortune 500 company might not be optimal for SMEs. The goals of an SME will differ from those of an individual. No matter the customer, they make it their mission to establish their intentions clearly.
In this way, they can craft business FX solutions that work best for each individual client. Any serious firm that does business foreign exchange has them on staff. If they don’t, make international business payments elsewhere.
A dedicated dealer can employ many creative solutions that can aid businesses/individuals. Take inheritances, for example. Every year, thousands of people repatriate them from abroad. However, if you move your windfall without consulting a dedicated dealer first, you could lose CONSIDERABLE sums of money.
In many countries, moving more than a specific amount can trigger gift, inheritance, or estate taxes. In Finland, for instance, only the first 20,000 EUR is tax-free for close relations. The state taxes every EUR above that – the more you move, the higher the rate you’ll pay.
Sometimes, though, you can get around the rules with a bit of creativity. If it’s legally possible, a dedicated dealer can break up an inheritance into tranches. This way, you may be able to avoid paying taxes on your estate.
Most strategies that dedicated dealers employ revolve around currency hedging. This term refers to tools designed to protect your capital from currency rate fluctuations.
The forward contract is one of the most common Forex hedging tools in the dedicated dealer’s arsenal. They reduce risk by establishing a guaranteed rate for a future currency transaction. Regardless of the geopolitical climate, your dealer will often recommend this arrangement for significant transactions. After all, it only takes one black swan event to damage your finances significantly.
Stop-loss orders also protect business FX clients from fiscal ruin. These tools set a rate that constitutes an acceptable loss for a business/individual. If you are a trader, you may want to consult a dedicated dealer about how to use this FX hedging tool. After examining your finances and your appetite for risk, they can recommend where to set it.
Finally, dedicated dealers from Foreign Exchange Companies can advise clients about limit orders. A tool commonly associated with stock trading, you can also use it for currency hedging. A limit order only conducts a currency trade when the named price is met. A dedicated dealer can advise its use to access rates that might not usually be attainable.
For instance, when the Coronavirus pandemic hit markets in March 2020, it (briefly) increased the value of the USD by historically significant margins. In situations like this, your dedicated dealer might recommend aggressive limit orders to take advantage of inter-session volatility. If prices don’t hit your target, no worries. But, if they do, you may be able to snag an incredible, once-in-a-lifetime deal.
All businesses, big and small, can use commercial FX services listed here. As long as your business is registered in Australia, New Zealand, United Kingdom, Eurozone, or UAE, you are good to go. For US-based businesses, you can choose OFX or Currencies Direct as these FX companies have licenses to operate in the region, while other companies listed here do not. There is no minimum trading volume which is expected of you, but if all your trades are under AUD $5,000, you might be referred to the online system and not be provided with a dedicated dealer from the FX firm. Since these Corporate Currency Exchange Companies are 100% compliant with Anti Money Laundering laws, you should anticipate quite a lengthy process until you are approved as a trade-able client. In the same fashion, you would have to provide a lot of documents if you decided to open a new business bank account. They will need unvarying proof of your business’ registration status, address, and bank account, to set up. This is the only major hurdle with these companies because once you have registered, you will be assigned with your own corporate FX dealer whom you’ll be in contact with for current and future trades. That person will know you, and your business, and will offer bespoke solutions to any query.