Travel Agency and Tourism Industry International Payment Solutions

Most companies involved in the travel and tourism industry have a need for the convenient and cost effective solutions offered by international money transfer firms. Incoming payments may come in the form of a foreign currency from international clients and outgoing payments often need to be converted to other currencies for the booking of hotel accommodations and tours.

If your business is involved in multiple global remittances monthly, then finding the right FX service is vital. Increasing the speed at which money is transferred from one location to another can improve positive cash flow and saving just a couple of percent on each transaction adds up quickly.

In the travel industry, the daily fluctuations of currency exchange values can have a huge impact on the bottom line. They also add an element of uncertainty to net profits. Accurately predicting the value of a foreign currency and hedging against sudden drops in exchange rates can often mean the difference between profiting and losing on an individual transaction.

A famous poet once said, “It isn’t the mountain ahead that wears you out — it’s the grain of sand in your shoe.” There is no better way to describe the effect losing a couple of percent on each and every transaction can have on your business. It’s the financial equivalent of dying the death of a thousand cuts.

Don’t let your travel company get bleed dry by the large banks. Instead of sticking with the same outdated money transfer methods your organization has been using for years, consider working with a dedicated currency specialist at an international money transfer firm. They offer payment solutions for incoming and outgoing payments that will save time and money.

 

Benefits of Working with an International Money Transfer Firm

  • Lower fees for transferring money
  • Better currency exchange rates
  • Streamlined money transfer processes
  • Automating the payment and collection of international payments
  • Mitigating the risk of currency fluctuations
  • Ability to initiate payments and transfers to over 130 different currencies
  • Reduce the problem of unpaid commissions by simplifying the payment process
  • Integrated accounting services improving control and visibility

These are just some examples of the benefits a travel company can realize by working with an international money transfer firm. By speaking with a currency specialist, most organizations can find additional custom solutions tailored to their business needs.

 

The Big Picture

Any travel industry professional knows that perception of the overall costs is often different from the reality. Navigating the obstacle course of hidden fees, poor exchange rates and transfer inefficiencies can be crippling with just one or two missteps. Competition is fiercer than ever before and the pressure to cut costs and increase profit margins has never been greater.

It’s time to revamp your approach to international payments and collections. Work with a dedicated FX firm to automate and streamline the process freeing up man hours and increasing the bottom line. It’s time to break from tradition and find innovative international payment solutions that give your company a competitive edge.

 

 

 

Small Business International Money Transfers

Small businesses are especially susceptible to cash flow problems. Sometimes, the delay of just a couple of days can hinder daily business operations. Expanding to work with overseas partners and consumers is hard enough without the money transfer process throwing a curve ball into the mix. The natural fluctuation of currency values against each other adds an element of uncertainty that affects vital cash flow.

There are a number of decisions that must be made when working overseas that can have a big effect on the bottom line. It’s not only about the value of a currency now; one must anticipate what supplies will cost three months after the order is placed based on the expected future exchange rate. If the value of the payment currency rises and a small business hasn’t properly planned for it, they may be left with a bill they don’t have the cash flow to pay. Similar considerations must be made for incoming payments to ensure your business is getting the domestic value it needs for products sold overseas.

While international business operations may have been the territory of large corporations in the past, the internet has made it a core activity in even small mom and pop organizations. The rapid pace of globalization has changed the way business is done and even the tiniest edge can help you outshine your competitors

Let a dedicated and knowledgeable currency specialist help guide you through the mine field that is international business by finding just the right solutions for your small business.

Use an international money transfer firm to:

  1. Manage risk with the proper use of forward currency contracts and currency options to stabilize cash flow.
  2. Initiate international payments with a streamlined process that is less time consuming and less costly.
  3. Receive international payments in a foreign currency and automatically exchange them into a domestic currency before depositing them into your account of choice.

 

How-to Save Money When Doing Business Internationally – Part Two

In part one of this article we discussed some things to keep in mind as you expand your business internationally, namely paying attention to exchange rates, researching low cost international money transfer options, and finding the right foreign bank account which offers you great service at a reasonable rate. Today we focus on another aspect of saving money when doing business overseas; hedging.

There are a number of ways you can hedge against the ups and downs in foreign currency exchange rates to ensure you are always getting the value needed for you goods.

 

Forward Currency Contracts

A forward currency contract lets you lock in a set exchange rate ahead of time. They can be used for protection if you are accepting large payments in a foreign currency and are worried the exchange rate might move against you. Once you purchase a currency forward contract, you get the agreed upon value for your foreign currency when the time comes no matter the current market rate.

The downside of using a forward contract is if you misjudge the market and the exchange rate improves when you are expecting it to plummet, you won’t be privy to the benefits. To learn more about forward currency contracts and how they are used, read “Using Currency Forward Contracts to Save on Large International Money Transfers”

 

Currency Options

Currency options are more flexible than forward contracts. With a currency option you have the right to buy or sell a particular foreign currency at a set rate on or before a specified date. The main difference with the currency option vs. a forward contract is flexibility. Unlike a forward contract, with an option you can choose not to go ahead with the exchange and keep your money in whatever form you currently hold it.

Because of the added flexibility you get with a currency option, you’ll be paying a higher premium for the deal; usually 1% or 2% over the value of the contract. If the foreign currency exchange rate goes down by 3% or 4% though, you’ll come out smelling like roses.

Currency options are best for large deals that may not ever go through. If you are unsure if the deal is going to work out, a forward currency contract is not a good choice as you’ll be stuck exchanging your cash even if you don’t want or need to. With a currency option you can choose not to exchange your money or use the spot exchange rate instead.

 

Holding a Foreign Currency

As long as you’ve set up a foreign bank account, you have a third option to hedge against poor exchange rates; holding a currency. This isn’t so much a permanent solution, but rather a temporary option that allows you to hold out until a profitable exchange rate comes around.

If there is a chance you might need the capital to cover operating costs at some time in the near future, holding a currency isn’t really a viable option as you may get stuck with an even worse exchange rate if you find yourself in a pinch and are forced to transfer your money quickly.

On the other hand, if you have staying power and are holding a foreign currency in stable economy that regularly has upswings, it can be beneficial to hold onto it for a couple of weeks or months until the currency increases in value. Holding onto a foreign currency also allows you to use it for paying bills, suppliers, etc in the country where business is being transacted which removes some of the risk involved with transferring and exchanging it. It’s less complicated than purchasing forward contracts or currency options too.

 

 

 

 

 

How-to Save Money When Doing Business Internationally – Part One

Growing your business from a domestic company to an international brand is an exciting and scary endeavor. On one hand, your homegrown business that you started from scratch is poised to explode on the international market where there will be countless new ways to profit and grow, but on the flip side there will be a number of unforeseen hurdles and a steep learning curve.

After logistics, one of the trickiest aspects of expanding internationally is managing your finances. A number of things can lead to higher costs and sometimes, just a tiny mistake can mean the loss of thousands of dollars. International banking and money transfers are a large part of doing business overseas and the fees associated with them are often overlooked as the cost of doing business, but they don’t have to be. There are a variety of things you can do to save money while growing your business overseas.

 

Keep an Eye on the Exchange Rate

Doing business internationally leads to unexpected ups and downs in your cash flow based on exchange rate swings. If you have a slim profit margin, this is doubly important. Exchange rates can work with you or against you depending on your timing and it’s vital to remember they change daily. Timing your currency transfers whether hourly, daily, or weekly, to align with the best exchange rate can equal to big savings.

In addition to keeping an eye on the daily swings in the exchange rate, there are a number of things you can do to hedge against negative currency moves. You can use forward currency contracts to lock in a specific exchange rate or set up a currency option. Check out part two of this article to learn about the ins and outs of these options more fully.

You’ll find out that at times it will be better to accept payments in a foreign currency and other times it’s best to accept payment in USD. Just make sure you discuss and agree with your clients upfront about the type of currency you’ll be accepting.

 

Don’t Forget About Banking and International Transfer Fees

The basics of international banking are very similar to domestic banking, but the fees associated with the services vary greatly. Take the time to fully explore your options to find out which institutions offer the best services at the lowest cost.

Even if you have a foreign bank account and credit card, at some point you’ll either need to send money abroad or want to take some of your profits back home. This is where you can really get whacked with international transfer fees from the large banks. Despite having an overseas bank account, it’s often best to use foreign exchange transfer services like Xoom or World First for your international money transfer. They offer better exchange rates than banks, usually by 3% or 4%, and the fess will be lower too. Many offer large international money transfers at no cost too.

 

The Takeaway

Expanding your business overseas is going to take a lot of moxy, a touch of knowhow, and maybe even a bit of luck. If you are smart about it and plan correctly though, the positives will far outweigh the downsides.