Home – New Forums Money matters Overseas transfers and hedging

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  • #982026
    Myparcelbox
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    Just after some info on paying for goods made overseas.

    I have looked at a number of currency transfer sites which suggest that they are a better option than just a TT transfer to pay a large invoice.

    My natural inclination is to stick with my bank, however wonder if I’m losing out on a better exchange rate with a safe provider.

    Any experiences to share?

    Also for any importers out there, do you purchase currency regularly for hedging purposes?

    thanks for your time

    #1134370
    MH08
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    Hi Myparcelbox,

    The banks are actually dearer than other currency transfers out on the market, though opening a bank account in the country you will be purchasing from will make it much easier over the long term.

    Also there should be agreements in place with your supplier to lock in the currency rate quartely or bi-annually.

    Eleborate on purchasing currency for hedging purposes?

    #1134371
    Cooke Consulting
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    I use HiFX for my foreign currency. You get to see the exchange rate in real time, so it’s just a matter of picking it at the time that suits you best and ‘Robert’s your fathers brother’ – job done.

    Simple sign up, helpful account managers.

    #1134372
    procnetservices
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    I have used HiFX also and it is very straightforward with better rates than the banks.

    The only hedging I have been involved in has been for multi million contracts over long periods of time. I am not sure what size deals you are looking at here but surely regular purchasing of currency to cover smaller deals will be betting on the market and the ultimate outcome would be the same as if you picked your transfer date through the bank and or HiFX.

    MH08 made some good recommendations which would probably suit you better in my opinion.

    Scott

    #1134373
    Myparcelbox
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    Thanks to all of you for your helpful replies.

    I will have a better look at HiFx.

    Re hedging I was more just wondering about common practices for transferring currency at set intervals to ensure you have certainty of cost.
    ie if you’re paying your invoices in US$ and expect to spend 100k that quarter, and for budget reasons need predictability then you might do the FX in full or part at the start of the quarter rather than when the invoices are due.

    MH08 in terms of locking in the currency rate, are you talking about having a term in the contract where the purchase price would vary if there is more than a set variation in the exchange rate?

    cheers
    MPB

    #1134374
    Divert To Mobile
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    Locking in an exchange rate as MH08 said is a form of Hedging and it doesnt cost you anything upfront. I think it would be the bank not the supplier to do it.

    (typically) you need to be dealing in large licks of money to make much difference, the only organisations that Ive seen doing it usually have a finance department that takes care of it.

    Steve

    #1134375
    MyGreatIdea
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    Myparcelbox, post: 152995 wrote:
    ie if you’re paying your invoices in US$ and expect to spend 100k that quarter, and for budget reasons need predictability then you might do the FX in full or part at the start of the quarter rather than when the invoices are due.

    As far as budgeting goes, I simply work on a rate of 0.85c as a worst case scenario. Any time the AU dollar is above this is a bonus for my budget :D

    Wendy :)

    #1134376
    Myparcelbox
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    Thanks guys, yep the locking in of exchange rates seems be the way to achieve the certainty I would like. Not dealing with huge amounts but my business model is built around selling my product at as close to cost as possible so having an accurate idea of what those costs are is important.

    Wendy I’ve built in some similar room to breathe, but had just thought that if I can secure the rate now then I can make accurate predictions. Gotta be happy with the $AUD at the moment!

    #1134377
    Cat – GLC
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    The banks rates are fairly high and most other international money transfer companies can better the rate as well as usually eliminate the transfer fees associated with paying invoices overseas.

    If you like send me an email and I will get you in touch with the person that I use.

    Cheers

    Cat :)

    #1134378
    MH08
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    Divert to Mobile – This can be done through the banks, but the supplier must agree to the temporary currency locks.

    You can actually finance the product from overseas, its called Documentary Letter of Credit, this acts like a bank guarantee for the overseas supplier. If they have an issue and think you won’t pay they can just contact the your bank and they’ll get the funds.

    By doing this you can have the product shipped from overseas before paying a cent for it (you’ll get the odd one that needs a small deposit in cash), have it based on a 30, 45, 60, 90 day account.

    Also don’t ever rate currency from the news, friend, gardner, pool guy, currency exchange rates are measured against the TWI (Trade Weighted Index) in a basket of countries.

    Click Here to learn how to calculate it correctly, there are calculators out there but I have never trusted them.

    To view the TWI normally it can be viewed here

    #1134379
    Myparcelbox
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    Thanks MH08 for your helpful replies.

    I have spoken to HiFx and looked at a couple of options including Western Union now.

    For now I think I’ll stay away from the letter of credit.

    My money issues have just taken a turn for the worse as Paypal froze my account today… Now I need a solution for that too :(

    Probably appropriate that i put it in a new thread though

    Thanks guys!

    #1134380
    Divert To Mobile
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    Thanks MH08, Ive never had an overseas supplier selling to me in AUD, usually their own or USD. It makes sense they would have to factor currency fluctuations back to their own currency if they did.

    Steve

    #1134381
    bridiej
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    I’ve used Tranzfers for years (they are part of Ozforex). Have found them to be very quick with low fees and also good telephone support if you ever need it (which I’ve done so probably 3 times in almost 8 years). Highly recommended. http://www.tranzfers.com/

    #1134382
    Workoz
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    Transfermate.com are also a very good one, no fees is you’re sending regular payments, pretty easy to setup

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