Charities and non-profit organisations often send money abroad or receive funds from different countries, but many are unaware of how much these transactions are costing them. There are some simple steps that NGOs can take to minimise costs and manage risks when trading in foreign currencies.
NGOs and charitable enterprises often work in dangerous environments delivering essential services in volatile situations. Ensuring there is a steady flow of money into front line delivery is critical but dealing in foreign exchange should not add to the risk or swallow up donation funds.
Not only that, but charities are duty-bound to demonstrate value-for-money and transparency in all their dealings. For a charity sending money abroad this means managers and directors being able to account for excessive transactional costs and taking steps to reduce them.
Establishing a strategy to achieve the best value in currency trades is essential. This will make sure that charities and non-profit organisations are not penalised by any hidden fees and that all donation currency transfers are always maximised helping to ensure funding is delivered to the people most in need.
Pinpointing the specific challenges applicable to your own organisation in its foreign currency trading is an important first step to developing plans to remedy them. Charities working in emerging and volatile markets face unique risks. Local currencies can be subject to sudden change which can quickly erode the value from the sums identified to drive projects and aid.
Charities and NGOs that send money abroad typically use a bank or a broker. Using a bank or certain currency brokers may not offer the best value as fees for using their services and hidden charges can greatly impact on international payments. Uncompetitive exchange rates can quickly add up when applied to large sums or frequent transactions, especially where risk is greater in dealing with volatile currencies.
Large NGOs and charities may have more leverage than smaller ones to negotiate with their bank or broker.
However, even the largest non-profit organisations often do not deal in sufficient sums to enjoy premium transaction fees from the big multinational banks.
A strategic approach is essential for addressing these challenges. Once the factors which are driving and influencing exchange charges have been identified and assessed for significance and risk, there are some steps which can be implemented to minimise cost. Centralising the currency risk for the entire organisation can really make sense. Removing the burden from local offices and bringing all transactions under a central processing team can increase purchasing power and save on costs.
Introducing and increasing competition to get the best rate for your for ex transactions can also yield positive results. Shopping around ensures you can identify the most advantageous business. Signing an exclusivity deal with a foreign exchange provider almost never makes sense. Even if the provider offers attractive fixed fees, they will more than likely be offset by the uncompetitive exchange rates you will probably receive. Taking a systematic approach to recording, tracking and analysing your past international payment transaction helps you to review whether you are actually receiving best pricing and great value for money with your current provider. Engage with a reputable currency broker who will be happy to undertake an audit health check.
It can often be worthwhile to engage the services of a specialist to track rates if you deal regularly with volatile currencies. When rates are favourable, consider sending large sums of money abroad or bundle future payments together and make them now. Most trusted currency service brokerages will be happy to offer alerts on foreign exchange rates to insure you are well informed. Using forward contracts is also an essential tool in your currency armoury. When making international payments in foreign currency your costs will fluctuate and margins become unpredictable, putting your cash flow at risk. A forward contract will allow you to lock in a rate of exchange for future delivery helping to minimise risk and giving a degree of certainty. There are several other easy-to-implement strategies which can save your organisation money on sending money overseas or receiving funds the other way. It’s advisable to speak with an expert on the subject if you’re still unsure.
It takes time, dedication, hard work and the generosity of donors for charities and NGOs to raise funds, so losing them to uncompetitive rates and hidden fees when dealing in foreign currencies is simply unacceptable. The Currency Account is designed from the ground up to enable organisations to achieve maximum value from international currency exchange and trades, meaning charities and NGOs are able to transfer and distribute their funds around the world as efficiently as possible. Access to the best exchange rates ensures that funds aren’t swallowed by unfavourable rates or high fees charged by traditional banks, whilst hedging tools enable charities to eliminate risk from international trade and money transfers, exchanging at a rate that is consistent with their financial strategy. Reviewing your existing currency strategy could be one of the easiest ways to reduce costs for your organisation. Our specialist team of experts is at hand to help you get maximum value from your funds and minimise the costs involved in sending money abroad. Together with a fast, secure and easy to use online platform, supplemented with access to the very best market experts in the industry there is simply no need to pay above the odds for international money transfers.