How to manage your budget

If you are a business paying overseas suppliers or an individual buying or selling a property or transferring money for a visa payment, your payment deadlines can often be in the future. The price initially quoted or, more importantly, the price you are basing your calculations on can change dramatically depending upon the exchange rate.

While getting the best rate on the day is important, buying your currency at the right time can be even more critical. Rate movements are often underestimated.

For example, between January 2021 and October 2021, there was a 3% rate movement on EUR/USD. For customers selling US Dollars and buying Euros, it would have been cheaper to buy at the beginning of the year. 

As you can see, even on smaller transfers, rate movements can still make a difference to your bottom line.

01/01/2021		12/10/2021
USD	EUR	USD	EUR	Difference
$22,428	€20,000	$23,100	€20,000	$672
$560,700	€500,000	$577,550	€500,000	$16,850
$1,121,400	€1,000,000	$1,155,000	€1,000,000	$33,600

_{(Rates based on 1.1214 1st January 2021 and 1.1550 12th October 2021).}

Whether you are new to making international payments or are a seasoned pro, we can help guide you through the process or complement your existing knowledge. Together we can find the right solution for you.

What are my options?

If you have all the money available now

1. You can buy as and when you need the currency. We can hold money on account for you, or you can transfer your money to your bank account (if you have one in place in the correct currency) or to a 3rd party.
2. Spartan FX can pro-actively monitor the market for a specific exchange rate. Once your desired exchange rate is achieved, we can notify you or automatically buy the currency on your behalf.

If you do not have all the money available now

1. We can fix the rate for a future payment. A 10% deposit is needed upfront; this is not a cost or a charge. The total amount is transferred when the remaining 90% is paid. (We may be able to offer 0% deposits, please speak to the team for more information).

 

Fixing the rate (forward contract)

Locking into the exchange rate in advance of your purchase or invoice payment is a perfect way to control your budget and potentially lock into a favourable exchange rate. It is an ideal budgeting tool and useful if you do not have all the funds available, for example, if you are waiting to be paid by your customers.

It is worth bearing in mind that you are locked into the exchange rate regardless of any positive or negative rate moments and, in most cases, will need to have 10% of the amount you need to transfer available.

What to use a forward contract for:

• Property purchase.
• Property sale (if you have 10% available in advance).
• Any future payments over £10,000.

Expert Tips

• Don’t overlook your international payments.
• Give yourself time. The more time you have, the more options you will have available to you.
• Have an honest conversation with your dealer to ensure they understand what you want to achieve. We’re here to help, and the more we know, the better the service we can provide.

 

If you are looking for a specific exchange rate, a speedy transfer or wish to minimise your risk to exchange rate fluctuations, our dealers have the experience to understand your requirement and meet your needs.

Speak to an expert today! Call Spartan FX on 0203 984 0450 or email info@spartanfx.co.uk