What currency is best to pay in now?

[KateCB]

I buy materials from India/Pakistan; historically I am given price and pay in USD; a new supplier today has priced in Euro.....given that low GBP value, what currency would be most beneficial for me to pay in?

 

[Milliardo]

Not really into business just yet, but as far as I can tell the US dollar would still be the best in payments.

 

[Mike10]

Ditch the GBP as it will drop seriously in coming years.

Try to keep your accounts in USD, as at this moment it is your safest bet.

 

[sarky]

I buy materials from India/Pakistan; historically I am given price and pay in USD; a new supplier today has priced in Euro.....given that low GBP value, what currency would be most beneficial for me to pay in?

GBP would be best if you're selling in that currency. Try to get the new supplier to quote in a pounds at an advantageous (to you) rate. You know what your costs will be "going forward" (as they say in bizness).

 

[japancool]

How are you obtaining the USD or EUR to pay your suppliers with?

 

[MikeJ]

Not really into business just yet, but as far as I can tell the US dollar would still be the best in payments.

Ditch the GBP as it will drop seriously in coming years.

Try to keep your accounts in USD, as at this moment it is your safest bet.

Seriously. People are paid a fortune to predict what will happen in currency movements, and don't always get it right. Don't take advice like this from an internet forum.

 

[webgeek]

@MikeJ - good advice all the way.

If UKBF was full of people who could predict currency movements, we'd have the most popular Forex forum on the planet.

 

[KateCB]

I use a currency provider - I get a rate from them for the amount of that 'contract', I pay them in the UK in GBP they pay using whatever currency I have purchased on contract. Works well, but as I have the ability to pay in ANY currency, I just wanted to know which one would be best right now! All suppliers hiked their prices last month when GBP fell anyway, so I wanted to minimise the damage to my bottom line!

 

[japancool]

I use a currency provider - I get a rate from them for the amount of that 'contract', I pay them in the UK in GBP they pay using whatever currency I have purchased on contract. Works well, but as I have the ability to pay in ANY currency, I just wanted to know which one would be best right now! All suppliers hiked their prices last month when GBP fell anyway, so I wanted to minimise the damage to my bottom line!

If you are transferring funds to your currency provider in GBP which they then convert to their target currency, it makes no difference whatsoever what currency you're paying your suppliers in.

Unless you have credit terms, then whatever currency is best will be the one that you think the £ is going to strengthen against by the time you come to pay it.

If you already have funds in your target currency, then it might make a difference.

 

[Jayser100]

I sell a lot in Europe (ecommerce) and like you I buy product in US dollars, so I convert the euros I make into dollars and hold them in that currency to use for buying stock. That way I don't take a huge hit by converting the money into sterling at any point. Obviously I would get a lot of pounds for my euros, but then it all disappears again if I have to convert it later to dollars to buy. Keeping your currency FX down to the bare minimum really helps.

 

[Matt.WD]

As others have mentioned, it seems best to buy and sell in the same currency wherever possible. Not just to avoid fluctuations in value but also high transaction fees. HSBC charged me an eye watering amount for a recent transfer to a supplier in Poland!

 

[MikeJ]

Don't use banks to pay people. You can get much better rates from other currency dealers.

 

[Matt.WD]

Hi Mike - any in particular that you'd recommend?

 

[Jayser100]

I use Currencies Direct, their online portal being i-payfx

Consistently one of the cheapest

I did get a good deal out of Barclays for paying bills from my euros and US dollar bank accounts in same currency: 5.00 euros per trade to Europe, and $10.00 to the US. if you trade internationally and accumulate foreign currency through sales, it's the way to go. I can pay my German VAT returns, my European returns agent and my US fulfillment agent in same-currency and save a heap of money. My guy in the US bills me weekly but he allows me to pay monthly, so it only costs me $10.00 plus a $4.00 bank clearance fee (generated by his bank in the US) in charges to pay him for a whole month of his services.

If you trade on the European Amazons, they have a rule that you can't directly transfer money into a bank account outside of the eurozone (even if you have a euros bank account in the UK!) so I do incur some charges in moving the money into a World First account and then moving it on here. Even though World First don't have to do an Fx before sending me the money, they still charge the equivalent of doing the Fx - well, I suppose they have to make their money somehow! What I can do of course, is transfer the euros I make into the US dollar bank account and use it to buy my stock from China at that $10.00 rate per transaction.

Since I set all this up with Barclays last year I have significantly reduced bank charges and Fx costs.

 

[MikeJ]

Hi Mike - any in particular that you'd recommend?

I have a CaxtonFX card, and have checked their foreign transfer pricing against Barclays and found it to be better. Didn't actually use it in the end though.

Like Jayser, we hold different currencies and can usually pay in the currency of the invoice, so it's not really an issue for us.

 

[Matt.WD]

OK great, cheers for the info. I'll check those out.