The outlook for 2023 is bleak. Soundbites from experts worldwide are touting global recession, downturns in growth, increasing inflation, and housing market crashes. The UK, particularly, is set to suffer this year with the war in Ukraine still impacting the cost of living and rising interest rates reducing demand for property while forcing up rental rates and creating a perfect storm to undermine the UK housing market.

Needless to say, times will be tough for UK businesses as the purse strings of the average household tighten, and the effects of slow growth and continued inflation begin to have more of an effect on the day-to-day. 2023 should be about saving, but making savings in the right places, being shrewd about utilising the services that are available to you, and leveraging them to offset increasing costs.

Something often overlooked is saving money through your foreign exchange provision. This can be a smart way to save money quickly without cutting back on other areas of your business.

Here are our top five ways to save money by optimising your foreign exchange provision:

• You might not be getting the most competitive rates from your bank

When you’re exchanging large amounts of money, a small difference in rate can make a big impact.  At Moneycorp, we source our rates through our panel of 16 liquidity providers but many banks are bound by a single rate.

It’s essential to manage your execution risk because, depending on how much you’re exchanging, the difference could be in the thousands – multiply that over the year, and your savings become significant.

• Watch out for hidden costs and unnecessary transaction fees

Watch out for hidden costs – some foreign exchange providers charge you to open a corporate account and to hold various currencies, while others charge fixed fees on transfers.  It is free to open and hold an account with Moneycorp, with either no, or only a small, transfer fee for businesses.

Compare the fee structure against your foreign exchange needs, as different providers will work better for your business. 

• Think about opening a multiple-currency account

If you receive multiple currencies, make sure you have an account that supports that. It’s easy to incur charges and fees inadvertently when you receive different currencies into your UK bank account – and once it’s done, it’s difficult to do anything about it.

With an account that holds multiple currencies, you avoid these fees. It’s an easy move to cut costs, and we’ve seen clients save over $10,000 a year simply by opening a multi-currency account.

Our multi-currency IBAN is unique to Moneycorp. It allows our clients to receive payments and hold funds in 30 different currencies from over 70 countries in the world.

• Use FX tools to help protect yourself against volatility

In 2022 the GBP/EUR rate fluctuated between 1.21 and 1.07 during the year; this represents a difference of more than 12%.  The impact of these fluctuations is present all the time in business, for example, when you raise invoices in foreign currencies.

In an ideal world, they would all be paid within thirty days, but sometimes, it can stretch over months. If there’s been a big swing in the exchange rates during that time, it’s bound to have a meaningful effect on the trade - whether it eats into your profit margin or swallows it up completely.

To mitigate this kind of risk, talk to one of our FX experts about exploring Forward Contracts. This allows you to hedge the rates on invoices for future payments, protecting you against volatility.

• Don’t be afraid to get some expert guidance

At Moneycorp, our FX experts work with you to understand your exposure and suggest the most appropriate currency tools that will enable you to save money on your exchange transactions. An experienced currency management professional can execute your risk management strategy in line with your risk appetite and investment objectives.

We know it’s not always easy to see the true cost of foreign exchange, so at Moneycorp, we start every client relationship with a free audit.

By looking at up to 12 months of data, including the times and dates of your transactions, the exchange rates, the type of products your business uses, and what currencies you trade, we help paint a clear picture.  This allows us to understand your foreign exchange history and the needs of your business to show you accurately how and where we can save you money.

Moneycorp can then help you protect your business from unwanted exchange rate movements with various strategies to suit your risk appetite and business plans.

Speak to one of our experts about a free FX Audit today.

Please note forward contracts may require a deposit. None of the information contained in this article constitutes, nor should be construed as financial advice. Moneycorp Financial Risk Management Limited (company number 5774742) is registered in England.  Its registered office is at Floor 5, Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ. Moneycorp FRM is a trading name of Moneycorp Financial Risk Management Limited is authorised and regulated by the Financial Conduct Authority for the provision of designated investment business (firm reference number 452443). Moneycorp is a trading name of TTT Moneycorp Limited and is authorised by the Financial Conduct Authority under the Payment Service Regulations 2017 (reference number 308919) for the provision of payment services.