Grow your SME using real-time exchange rates

Any SME or mid-cap relying on their bank for foreign exchange transactions, and international transfers in particular, can testify that the system in place is both opaque and costly. With little to no information about the exchange rates applied to their transactions, SMEs can sometimes be taken aback when discovering their transfers incurred unexpected currency exchange fees and mark-ups. Today, however, a number of innovative and transparent solutions provide SMEs and mid-caps with live exchange rates, enabling them to make international payments at the time that makes most sense to them in terms of market value.

What makes exchange rates fluctuate so much?

Currency rates are ultimately related to the relative strength of the underlying economy. Essentially, the principles of supply and demand govern a currency’s price and they are determined by several evolving factors that contribute to keeping rates in constant flux. These factors include:

• Import and export levels

• Geopolitical stability

• Inflation

• Interest rates

Because currency is needed by banks and businesses around the world all the time, the foreign exchange market is open around the clock from Sunday to Friday. As one market closes, another opens, or has already opened, and continues to trade. The demand for and international scope of currency trade means that traders are buying and selling currencies at any one time, explaining why the value of currencies is in constant fluctuation.

Who benefits from live exchange rates?

Thanks to their volume of trade, large multinational companies, foreign banks, investors, and private traders are granted a range of favourable financial services from their banks. Services like access to forex trading rooms let them take advantage of live currency rates among others.

In contrast, because SMEs do not usually have the critical volume of foreign exchange transactions that would grant them access to these trading rooms, they have to make do with the daily foreign exchange rate. This rate, which reflects the daily average, often includes undisclosed built-in fees as banks apply margins of 3-5% to remain competitive if ever the exchange rate fluctuates from the rate offered.

Because they are given daily exchange rates, SMEs often pay considerable fees on their international transfers and are left with little to no payment transparency. In fact, when making cross-border payments they usually don’t know when the transaction is carried out exactly and therefore the rate at which the exchange takes place or the margin deducted by the bank. SMEs looking to expand abroad should strongly consider including live exchange rates as part of their business growth strategy to optimise cost saving opportunities.

The advantages of real-time exchange rates

Because they are more accurate and transparent than daily rates, live rates are becoming increasingly popular among companies in the know. Being able to benefit from an exchange rate in real time offers companies four specific advantages:

• Knowledge

  Knowing the exchange rate at which a transaction will be carried out, ahead of time, is the first advantage. This provides transparency in foreign exchange transactions and a sense of increased trust in the institution carry out these transactions, something SMEs and mid-caps usually miss out on.

• Choice

  By benefitting from real-time data presented in a transparent manner, companies are able to decide when to carry out their transactions to best suit them. iBanFirst’s platform is available all day everyday while the market is open, giving our clients unprecedented flexibility to arrange their transactions when it suits them.

• Insight

  With this added transparency, companies are able to seek insight from intermediary institutions, such as iBanFirst, which provide factual information and allow them to make an informed decision with regard to their international payments.

• Savings

  Equipped with all the information needed to execute their transactions at the right time, companies can leverage this awareness to regularly save money on their transactions. With access to live exchange rates, they can even go a step further and make bigger savings by offering to pay their suppliers in their local currencies.

How can iBanFirst offer SMEs and mid-caps access to real-time exchange rates when banks cannot?

Technological developments are democratising access to foreign exchange-related financial services, including real-time exchange rates. At iBanFirst, we combine our forex expertise and leverage state-of-the-art technology to offer a more transparent service and a superior customer experience. Thanks to the volume of our clients’ transactions, we can offer them access to trading rooms, and allow them to benefit from similar real-time exchange rates as large companies.

What’s more, because a payment services institution like ours is not weighed down by a traditional bank’s fixed historical costs, the rates levied on foreign exchange transactions are significantly lower than those applied by banks. However, we guarantee the same level of security and accountability as banks and ensure that the transactions we carry out for our clients are secure, confidential and above all, regulated by a European regulator.

How long is a live exchange rate valid for?

As the foreign exchange market is constantly changing, so too are currency rates. Banks and companies have their own set of data to calculate the rates they apply and as a result, rates tend to vary slightly. At iBanFirst, we fix currency rates for up to 10 seconds so you can lock in a transaction at the rate that suits you.

Who needs real-time exchange rates?

At iBanFirst, we provide our clients with direct access to live currency rates directly through our platform. We assist company owners, corporate treasurers and finance teams within SME businesses by providing more visibility of the foreign exchange market through transparent and accurate FX rates which help them mitigate currency risk, improve cash flow and reduce currency exposure. Because we know that employees in most SMEs wear multiple hats and have little time to dedicate to any one task, our platform was built to be as easy and straightforward to use as possible and our dedicated account managers provide personalised support to best understand the foreign exchange-related issues that afflict each of our clients.

For more information on our tools and services, contact our account managers to find out how iBanFirst can help optimise your foreign exchange transactions.