FCA Regulated International Foreign Exchange Services


12:40 PM July 25, 2022

12:48 25 July 2022

Thinking of taking the plunge into the world of international payments? Currency exchange can seem daunting, but don’t let that stop your business from taking the next step.

For Norfolk businesses, particularly those in the agriculture, energy and technology sectors, operating in the global marketplace can strengthen supply chains, increase sales opportunities to customers and provide access to resources essential to future success.

However, to maximize the opportunities that globalization can provide, you will need to establish secure cross-border transactions and develop an effective foreign exchange strategy.

Foreign Exchange Specialists, Clear Currencycan help you understand your options, protect your bottom line, and ease your transition into foreign business markets.

Below, they explain a little more about the types of international transfers and when to use them to reduce risk and costs.

Q: What types of international transfers can businesses use?

A: Depending on what you are paying for, you may consider several international transfer tools. The two main types are spot transfers and futures.

Q: What is a one-time transfer?

A: There are three versions of a one-time transfer:

  • Same Day Spot Trade – where funds are settled on the same day
  • Next Day Spot Trade – where funds are settled the next business day
  • Spot or spot value – where funds are settled within two business days.

The agreed value date depends on the country and the required currency. For example, due to the time difference, Australian dollars cannot be settled on the same day.

Energy companies can use a forward contract to buy land abroad, to protect against exposure to currency risk.
– Credit: Getty Images/iStockphoto

Q: What are the benefits of using a one-time transfer?

A: Because the exchange rate is fixed, you’ll know exactly what you need to pay right away, allowing you to transact quickly. Unlike forward contracts which require credit terms to be agreed upon, spot transfers do not.

Q: When can you use a one-time transfer?

A: A one-time transfer can be used to make an instant purchase of machinery or to pay foreign contractors.

For example, a farmer in Norfolk may need to quickly purchase high specification kit overseas, to increase efficiency during labor shortages caused by Covid-19. If they buy in another country, they will have to pay in the local currency and will therefore have to make an exchange.

By opening a Clear Currency account, they will be assigned a dedicated account manager who can provide an immediate spot rate. The farmer will then understand exactly what he has to pay in GBP.

Clear Currency will then transfer the farmer’s sterling, ensuring they have the cash to purchase the machines, in the correct currency, within the agreed time frame.

Q: How is a forward contract different from a spot transfer?

A: If you want to schedule a payment for the future or want to avoid market volatility, a cash transfer may not be the most suitable option. Instead, a futures contract may offer a better solution.

A forward contract is used for those who wish to agree an exchange rate today for a future date. For this, the currency specialist will set up a line of credit.

Q: What are the different futures contracts?

A: Several futures contracts are available. The three main ones are:

  • Open window forward: These are the most commonly used due to the flexibility they provide. This type of forward allows you to use the contract gradually over a fixed period of time. For example, you can sell GBP to buy €100,000 and agree to use the amount over 12 months.
  • Undeliverable Transfers (NDF): An NDF allows you to lock in an exchange rate, although currencies bought or sold are not exchanged. Instead, you will select a future maturity date and settle the difference between the NDF and the fixed rate in cash paid to your currency provider. NDFs are used to hedge commodities or non-convertible currencies.
  • Fixed date futures contracts: You will agree on a future due date on which to pay the full amount. The exchange cannot be made before the agreed date. For example, if you sell GBP for €100,000, you will receive delivery of the full sum on the selected date.

Q: Why use a futures contract to make international transfers?

A: A forward contract can help you reduce your exposure to currency risk. Being aware of the costs involved upfront will also allow you to budget accordingly.

Currencies continuously strengthen and weaken due to various political and economic factors. Fluctuating rates can lead to unexpected costs, which means you could end up spending more than you planned.

Clear Currency's payment platform provides access to live market rates and international payments.

Clear Currency’s payment platform lets you make international payments on the go.
– Credit: Pexels/Mikhail Nilov

Q: How can Clear Currency make it easier for businesses to manage overseas transfers?

A: A currency specialist like Clear Currency can help you know when to use a spot transfer or forward contract, and help you time the markets for the most favorable exchange rates.

Clear Currency helps you simplify your international payments, so you can focus on what you do best: running your business, your way.

Clear Currency is regulated by the FCA and has a 5* Trustpilot Rating. Sign up for a Account today.

To open an account and find out how your business can make fast, secure and cost-effective international currency transfers, visit clearcurrency.co.uk.

Call +44 (0)20 7151 4871 or email [email protected] for more information.


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