While you already have a payment system set up for your domestic customers, you shouldn’t rely on that convenience for receiving payments from international customers. Your bank may offer the opportunity to process international payments, but you’ll likely pay higher fees. You should be especially cautious if your bank won’t reveal the fees they will charge until after you set up the foreign exchange option. Instead, you should shop around for foreign exchange services that offer more transparency and lower rates.
Maintain Foreign Currency Accounts
One thing to consider is whether or not you’ll need to use foreign currency in the country of origin. If you maintain a business in a different country, it may make more sense to keep the revenue you generate in a bank within that same country. This will save you from having to transfer some of that money back to the country of origin to pay shipping costs, lease payments, or utility bills.
Don’t Wait For Better Rates
A common habit for international business owners is to wait to convert currency and transfer it to their U.S. accounts because they think the foreign exchange rates will improve. This is a mistake partially because there’s no reliable way to predict these types of rates. Secondly, this means keeping a portion of your business’ revenue inaccessible while you wait for rates to drop. You may need that extra cash flow sooner.
Look For Exchange Rate Locks
You should look for a foreign exchange service that will allow you to lock in rates when you know you will be receiving funds. Locking at a lower rate can save you as much as 20% in fees when you have that option available. You should also look for a service that won’t automatically exchange funds to help you take advantage of locked-in rates. If you can choose when the funds are transferred, you’ll have more control over the rates you’ll pay.
In looking for a foreign exchange provider, be sure to read all of the fine print. In addition to looking for the best rates, you’ll want to find out what supplemental services each company offers. You should look for the service that will offer you the best benefits at the lowest cost. Just like any other type of financial service, the services and fees of foreign exchange companies vary from company to company.