Foreign Trade / Foreign Currency

Why Transact in Foreign Currency?

If your company does business internationally but still transacts in US dollars, you may be missing out!

When it comes to importing goods, you should understand and recognize that paying suppliers in U.S. dollars may not benefit your business.  Using foreign currency can provide numerous benefits and may mitigate risks you have not considered.

By utilizing foreign currencies, you can maximize your returns taking advantage of exchange rates and avoiding foreign currency conversion fees.  Foreign suppliers may even be more comfortable doing business with your company in their country’s currency!
 

Some Benefits of Transacting in another Country’s Currency:

• Exchange Rates: When exchange rates are favorable, meaning the U.S. dollar is worth more than the foreign currency where you are doing business, you could improve your profit by making payments in foreign funds. Essentially, you will pay a lower price for the goods you import.
• By purchasing goods in foreign funds, your business can also avoid the fees and costs associated with converting U.S. dollars into foreign currencies.
• Businesses in other countries often include a premium when quoting their pricing in U.S. dollars. The added cost is to offset the fees associated with converting funds and additional processing expenses required to accept payment. You can avoid these additional charges by paying in the exporter’s local currency. You also may be able to negotiate better prices with suppliers or find additional suppliers who may otherwise be reluctant to do business.
   

International Payments and Foreign Exchange Tools

Choose from various payment tools that provide you with additional cash management opportunities.

• International Wire Transfers (both USD and Foreign Currency)
• Foreign Currency Forward Contracts (lock the exchange rate today on your future foreign currency transactions – up to one year)
• Foreign Currency Drafts
• International Check Collections

Purchasing in foreign currencies can provide importers of foreign goods several advantages that could boost their bottom line. The key is using available tools to reduce risk, improve transaction efficiency, and help prevent fraud. Foreign exchange, currency fluctuation risk, and international business finance are complex to navigate. It is important for business owners to have a trusted financial partner who can help them select the right tools for foreign currency imports and achieve their goals.
 

This article is for informational purposes only and is not intended to provide specific advice or recommendations. When making decisions about your financial situation, consult a financial professional for advice on your business objectives.