20 April 2010 | Nick Martindale
Buyers from smaller organisations could get better deals on foreign exchange by paying more attention to bank fees and exchange rates, a survey suggests.
Research found that small and medium-sized enterprises lose between 1 per cent and 3 per cent on each foreign exchange transaction, costing them as much as £1,200 a time.
Adrian Jacob, senior account manager at Currency UK, which carried out the research, said: “Approximately 80 per cent of small companies are unaware that they can get better rates by comparing the market.
“As a result many are not using tools to help them reduce risk and protect income, for example setting the exchange rate for a set period of time through a forward contract or using limit orders which trigger the purchase of currency when the desired exchange rate is reached.”
Larger organisations, meanwhile, are given more favourable exchange rates by banks and benefit from proportionally lower fees as the economies of scale can justify multiple currency accounts, he added.
Banks also failed to alter their rates during a working day, meaning companies often lost out when markets improved, Jacob said.
Buyers can also play a role in educating smaller suppliers on taking advantage of foreign exchange markets, helping to protect themselves against price rises in the process
* There will be a feature on how buyers can deal with currency fluctuations in the 29 April edition of SM.