10 Things Small Businesses Need To Know About Foreign Exchange

In the past decade, it shows the foreign exchange turnover in the UK starting from 1992 to 2016 have increased gradually from 21% to 41%. The international currency exchange turnover almost doubled in this decade and a half. Albeit, the rise hit a plateau in 2016 at 37 per cent but it is still a significant increase when compared to the first recorded data in 1992.

The credit for this prosperous gain in the currency exchange sector in the UK goes to the advent of money exchange services in the UK. With modern technology and the internet, they have made the process of making international payments convenient.  Now, anyone can access their funds and transfer from the comfort of their home. Better yet you can log in to your foreign exchange account and transfer funds with your phone. Thus, making the whole process of cross border payments easier and efficient. 

Why Do Small Businesses Need To Know About Foreign Exchange? 

Whether we own a business or not, we all want growth for our businesses. No one wants to be in the same place they were before, we want to grow and move forward in life. For small businesses, learning about foreign exchange is vital. Even if your business does not operate internationally right now, learning about foreign exchange and how it can help your business can come in handy at a later date. Below we will discuss 10 Things Small Businesses need to know about foreign exchange. 

  1. Do your homework:
    Doing research and taking the necessary measures is very important when you are doing something new. You must do your homework before diving into anything. Without proper research, you will have a limitation of knowledge, which can become detrimental and hinder you from making the right decision.
    The ideal thing is to get the basic idea about something before you attempt it. This helps you prepare and understand the actions you will be taking. With the help of the internet, learning about something new has become less challenging. You can Google and get the basic idea about a specific thing without even lifting a finger.
  2. Understand and Assess the Risks:
    Trying out new things for the growth of your business is good. But before you take the initiative you must understand and assess the risks involved.
    A good way to assess the risks of using a foreign exchange service is to check about the past experiences of other businesses using this service. It is important you have a clear reason for using foreign exchange services.
    For example, You have an export and import business. You need to transfer and receive funds internationally. As of now, you are using traditional money transfer methods. Where you do not get competitive rates nor do you get better turnaround. That is why; you are looking for an alternative money transfer service.
    With traditional transfer services you already know the risk, since you are planning to start your journey and use it for cross border payment services for international currency exchange. Make a list of the risks involved with foreign exchange transfers and how you can counter it. To make your life easier we discuss some of the risks associated with money exchange services.     
  3. Exchange Rates Fluctuate:
    One of the main things about foreign exchange rates is they fluctuate. They are not static. You could send money at a given rate and by the time it reaches its destination the currency rate may decrease.
    This is a very important thing you need to keep in mind when planning to make large fund transfers. It is important for you to understand the exchange rate and it might during the process of sending the money. This is a risk most foreign exchange service users take.
    The situation I talked about is the worst-case scenario. The exchange rate only comes crashing down in case of major political or environmental influence.
    For example, The country you are sending the funds to (God Forbid) is hit by a tsunami. The currency rate of that country will drop. So, if 1 GBP was X amount there, it would increase. So, you will get an increase in funds. If you are down on your luck you could be on the receiving end of such things too.                                                                                                       
  4. How Political and Environmental Factors affect the Foreign Exchange rate?   
    Instability is a key reason foreign exchange rates dip. This could be influenced by the overall political structure or environmental factors too.
    In this Pandemic, exchange rates all around the world decreased in value. This is because businesses and services could not operate at their maximum capacity. Some of them even could not function and had to close their doors.
    Or take Brexit for example in the UK, it is influencing how businesses are run in the UK. So, there is a ripple effect of it in the countries financial record. With the UK leaving the EU, it affected Great Britain Pound. This will also affect the international fund transfers you do with the British Pound.
  5. Little to No Charge!
    One benefit for foreign exchange services is they charge you a very small amount for their services. If the fund you are transferring is given a certain amount they will not even charge you. For most foreign exchange services that sum is around 3000 pounds. Make sure the service you are using has no hidden fees. 

Conclusion

The overall benefit of using the cross border payment services outweigh the cons. SkylineFX is one of the leading foreign exchange services companies in the UK. They have 24/7 customer support and the best rate. 

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