Posted 11 Novembro, 2024
In Companies, Currency exchange, News, Relocating
Text: Chris Graeme; Photo: Joaquim Morgado (American Club of Lisbon)
When small and micro companies decide to open an office in Portugal, one of the last things some tend to consider is the cost of transferring funds to open up the venture and cover the relocation costs.
In fact, the same goes for digital nomads and overseas relocators in general, who don’t think to plan a cash transfer in advance and simply leave it to their banks, not even considering if they are even getting a good deal on the rate or not. This is equally true for companies purchasing products from and paying suppliers in a non-EU overseas jurisdiction.
I caught up with Sarah Davey, a UK currency exchange consultant for Spartan FX Foreign Exchange at an event organised by the American Club of Lisbon.
Sarah moved to Lisbon from London around six months ago as one of the many young, mobile and ambitious professionals who have chosen to relocate to Portugal for the business opportunities and lifestyle it offers.
I was puzzled as to why any non-EU relocator moving to Portugal and finding a property would not use a high street bank to transfer their money. After all, they are bigger, and bigger means more transactions, which in turn means cheaper rates, right?
Wrong! Sarah says that currency exchange is not a core business for many banks as they make more money off other products and services. This can be seen with older and larger banks that have got a system that is old and antiquated and essentially needs modernising. These changes cost a lot of money, so there is often “a sticking plaster approach. “It works, but is not as efficient as it should be”, she explains.
“When you’re moving money abroad as a business there are three aspects to take into consideration. Price is the first thing when comparing exchange rates offered by a bank or a foreign exchange company”, says Sarah.
Sarah stresses that private exchange and transfer companies can offer a cheaper deal based on a given day’s current exchange rate which is particularly useful when dealing with large currency transfers.
“It’s always worth shopping around because the number of businesses I’ve talked to that have checked the rates against their banks are really shocked to see that they are not getting the competitive rates they had been expecting”, says the specialist.
The second problem that Sarah has found is that many people and businesses don’t consider the advantages of using a currency exchange specialist enough.
“It tends to be a last minute thought because whether it’s a business or an individual relocating, they are focused on the tax, the visas, and the clients, and it’s not until they get that invoice from overseas that they think about it, and that makes these transactions more expensive”, she explains.
The third important aspect Sarah points to is even though technology has moved on, the compliance side of things and the checks that banks have to do have got more complicated and as a result payments get held up.
“Banks are limiting how many transactions you can do in a month. All of a sudden, you’ve left it till the last minute, but you need to make this payment yet find your money is being held for two weeks”, she says.
“We can broker against this beforehand by looking at the exchange rate and buying currency in advance, or we can step in with the bank to get the compliance done by checking beneficiary account details and ensuring the money isn’t intercepted and sent to the wrong account”, she adds.
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