Exporter man in a warehouse

Exporters – Why banks are not the best option for collecting customer payments

Posted on 6th September 2018 by

SME exporters have a tendency to price their products or services in their home currency, but international customers are increasingly demanding to pay for goods in their local currency.

For exporters that do not offer a local pricing option, this can lead to lost sales as customers turn to native suppliers who can be more accommodating with their requirements.

The pain points

Processing Sterling payments from overseas customers can often be a time consuming and costly exercise for SME exporters. Every time a customer sends an international payment, their bank takes a cut from the exchange rate and this usually means the exporter does not get the full amount they invoiced.

In addition, it’s a burden for their accounts receivable department to try and reconcile which payments relate to which invoices because the incoming credits do not tally with the amounts in their accounting system.  This can lead to delayed payments and adversely affect working capital.

Even if the exporter chooses to accept bank payments in the customers own currency, they will not be able to control the timing or the exchange rate at which the receiving bank converts the payment.  Again, the payment is hit with more charges and the exporter receives a lot less money into their bank account as a result.


Global Collections

“The answer to the problem lies in the exporter taking more control over the currency conversion process by routing the payment through a 3rd party payment platform” says Jamie Holmes of foreign exchange broker CurrencyWave.

CurrencyWave exchange for importers and exporters

Through CurrencyWave’s Global Collections service, SME exporters can offer their international customers the option to pay an invoice in their local currency.  Once payment is received on the platform, the exporter then has the flexibility of converting the currency at a time of their choosing and at exchange rates far superior to those offered through the bank.

“Our research has shown that by using our platform, exporters could save up to £1,741 in hidden charges as a result of poor exchange rates, on processing a €65,000 receipt” says Holmes.


Currency Management

By offering the option to pay in their local currency, the cost burden and risk from currency movements is now removed from the customer’s point of view.  However, it is important to note that the exporter now takes on the risk that currency movements could affect the eventual amount of money received.  Through the use of forward currency contracts, which allow the exporter to lock in exchange rates for future conversions, this risk can be alleviated.

To find out more about collections, forward currency transactions and how they can be used to reduce currency risk, call CurrencyWave on 0113 451 0180, email info@currencywave.com or visit www.currencywave.com


The information in this article has not been written by Caunce O’Hara & Co Ltd or any of Caunce O’Hara’s employees. None of the opinions or views contained within this article are Caunce O’Hara’s nor do we accept responsibility for any financial advice given within the article.

Caunce O’Hara & Co Ltd do not provide Tax advice nor advice regarding Investments. Any commitments are taken solely at the person’s own discretion.

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