SMALL businesses operating in overseas markets are finding they need to devote increasing amounts of their time and attention to their foreign exchange needs.
Foreign exchange is largely the premise of the banks and most small business people seem to think it is an automatic process that attracts the one fee.
This is not the case.
Most financial institutions operating in the foreign exchange marketplace offer different daily rates of exchange.
Other financial institutions are setting up in the same mould as mortgage originators. They scan these rates to offer their clients the best rate to fit their needs.
Small Business Development Corporation managing director George Etrelezis said that, as clients, most small businesses expected their bank to do the right thing.
“If there are regular transactions involved it’s best to sit down with your banker and work out what’s best for your business,” Mr Etrelezis said.
“If you don’t know enough about foreign exchange there are courses you can do to get a better understanding of the market.
“Small businesses should still demand guidance from their banks. Find out the best ways to put through their transactions.”
OzForex managing director Matthew Gilmour said small businesses were losing millions of dollars in foreign exchange transactions each year.
His company, an online foreign exchange provider, canvassed forex quotes from five banks and one non-bank to buy £8,000 to send to the UK by telegraphic transfer.
It found the best provider on the day charged around a 1.2 per cent margin on the underlying Interbank rate and the worst charged a margin of more than 2 per cent.
Mr Gilmour said each 1 per cent margin equated to around $230 of extra cost on the purchase – before additional transfer costs were paid.
