Expert view: Top foreign currency tips
With the economic climate making life tough for many businesses, it is tempting to look further afield to try to find new markets.Here David Wright, European business adviser at EENW, provides some timely tips for trading with foreign currency.
1. Remember, currency values can move up and down from minute to minute, and that can be the difference between profit and loss for your business.
2. Recent strengthening of the euro and weakening of the US dollar can represent a benefit or a challenge, depending on which side of the fence you are on.3. Insure yourself against currency fluctuations.
4. Do your research on the currency pairs you are dealing with, finding out, for instance, where the pair has traded.5. Remember that currency movements mean you will not always get the best exchange rates – if you keep holding on hoping it will rise, you may well end up with a worse rate.
6. Offering to invoice or pay in the currency of your overseas trading partner is risky – but it can provide a strong competitive or cost advantage.7. Invoicing in sterling may eliminate foreign exchange risk for you as the exporter, but it transfers it to the overseas customer.
8. Your bank should be able to offer advice on foreign exchange transactions, but there are also specialist providers.9. Find a foreign exchange provider with experience of the market. One who is offering unrealistic rates and no transaction charges is probably too good to be true.
10. Regularly check what you are paying in bank charges and see if you could get a better deal by using a foreign exchange provider.David Wright, Enterprise Europe Network www.eenw.org