An Introduction to Forwards, Futures and Options | Part 1

03-06-2020 | by Aastha Tomar

Our financial world has now gone through enough crisis. Some learnt from previous crisis and were braced for the next while some were still in their learning phase. The current crisis took everyone by alteration because this time it was not the financial sector which was responsible for the ordain. The fluctuations seen in equity, bond, commodity and currency markets may have become Achilles heels for Corporate Treasurers in current times.

The incumbent state of affairs was such that Corporates had to protect their bottom line while trying to stay afloat. The entire cash flow projections would have gone for a flip for those who didn’t hedge their foreign currency exposure. One way that would have taken a part of vexation away from corporate treasurers due to currency fluctuation is hedging. It would have attenuated the impact of currency fluctuation on investments, borrowings, assets etc .

Let us have a look at the most used and basic methods of hedging in this article :

Forwards

So what are forwards? In a simple language its a hedge product between two parties which freezes your cash flow for a future date. That ways whatever the market situation be on the maturity date of the hedge, your cash flows are locked and predetermined. Whether you are an exporter who can know the exact value of future payments or an importer who can anticipate the exact costs of products; a forward will hedge the risk of currency fluctuation for both.

Features of Forwards :

  1. Specifies the amount, date and rate for a future currency exchange
  2. Parties involved are banks and businesses with foreign currency exposure
  3. They are over the counter products
  4. They can be customized
  5. They need two parties, one buyer other a seller
  6. There is no upfront payment
  7. Determining a currency forward rate depends on interest rate differentials for the currency pair in question

Example :

Suppose you are an exporter based in the Netherlands and you want to sell Dollars in an years time. You know due to current euro zone, corona crisis and negative interest rate scenarios Euro may fluctuate sideways and therefore you want to lock in the price of USD today itself so that one year down the line you don’t have to worry about the fluctuating rates. What do you do ? You approach a bank informing them that you have to sell USD (buy EURUSD) for 1st June, 2021. After basic documentation bank enters with an forward agreement with you . Where in today’s spot rate , the currency premium for one year , the amount of hedge and the maturity rate will be mentioned .

 

Spot EURUSD : 1.08282 (1 EUR = 1.08282 USD )

1 year interest rate for EUR = -.07%

1 year interest rate for USD = 0.7%

 

So after one year based on interest rate parity :

 

EUR 1* ( 1+(-.0007))= USD 1.08282 *( 1+ .007)

0.9993 EUR = 1.090 USD

Therefore 1 EUR = 1.0911 USD

 

Therefore by entering a forward contract today you have fixed your EURUSD rate to 1.0911. Note that because the dollar has a higher interest rate than the EUR, it trades at a forward discount to the EUR.

 

Let us take a simple scenario analysis to make things clearer :

 

Here the forward deal amount is : EUR 1mn

Spot rate on the day of deal is : 1.08282

Forward rate fixed for the deal is : 1.0911

We can clearly see above that if the spot is same as the forward rate on the maturity date then there is no loss or gain, but if spot moves to 1.09250 then the corporate saves USD 1400 on the contrary if spot moves to 1.0900 the corporate wont be able to take advantage of the low price and will have to exercise the forward at 1.0911 as fixed earlier thus letting go of USD 1100.

So if forwards are so beneficial why do corporates still do not execute forwards for all of their foreign currency transactions :

  1. There is some documentation involved and corporates sometimes feel that its time taking and taxing
  2. At maturity date what so ever the actual spot rate be your forward will be executed at the fixed price , and some corporates feel that they may lose a chance to take advantage of better rates.
  3. Banks charge a small fee for entering the transactions which corporates want to save.
  4. Corporates feel the currency wont fluctuate much and hence don’t want to get into forward transaction.

Whatever the reasons be but the main business of corporates is not to use their energies in managing their fx risk but to increase profits by their mainline business hence its always advised for corporates to hedge their fx risk as much as possible to increase efficiency and prevent themselves from unseen shocks.

In our next post in this series we will see a second type of hedge … to be continued. Till then keep learning and be safe .

 

Aastha Tomar

FX & Derivatives | Debt Capital Markets | MBA Finance
Electrical Engineer | Sustainability

Why FX Risk Management is Crucial for Your Organization

28-05-2020 | treasuryXL | XE |

If your organization deals at all with international currencies, then it will have some degree of foreign exchange risk. Volatility in the currency markets and global events can lead to drastic changes in currency values from day to day, and these shifts can in turn have substantial business impacts.

Some organizations may not have the expertise and resources to formulate foreign exchange policies and risk management strategies, while other organizations might have measures in place that haven’t been updated to reflect their current risk profile. Or maybe a business is under the impression that their foreign exchange risk isn’t as serious as it is, and that other aspects of the business should be of higher priority.

Any organization that works with international currencies in any capacity will face foreign exchange risk, but there’s no one-size-fits all solution: your organization’s risks will be unique to your operation, and an effective risk management strategy will need to be tailored to address your risk profile.

Keep an eye on this blog: we’ll go into further detail about assessing your organization’s foreign exchange risks and developing your own plan in the coming weeks. Today, we wanted to start off the conversation with a look at some of your business’s potential foreign exchange risk factors.

Is your organization making these risk management mistakes?

Whether your business lacks a foreign exchange risk management plan altogether or you’re looking to enhance your existing procedures, it can be difficult to know where to begin.

Below are some of the most common—and costly—foreign exchange mistakes that businesses make. Take a moment to read through them, and consider where your organization falls.

  1. Not understanding your foreign exchange risk level. Do you know if your organization faces any foreign exchange risk? How much? What are your risk factors? What are the potential impacts to your business? Many businesses (particularly smaller ones) don’t know the answers to these questions. Without a proper, thorough risk assessment, your organization could be exposed to risks you haven’t even considered.
  2. Not having a foreign exchange risk management policy. After the risk assessment, the next step for your organization is crafting a comprehensive risk management policy that addresses your potential foreign exchange risk factors. Without a policy, your organization would only be able to react to problems after they’ve already happened and potentially caused damage.
  3. Focusing just on the rates, at the expense of other factors. Exchange rates are one of the most important aspects of foreign exchange, but they aren’t the only important thing. When assessing foreign exchange providers, don’t just look at the rates they offer. Look at the other services they offer and whether they can benefit your business. And be discerning: if something sounds too good to be true, it’s possible that it is.
  4. Not taking advantage of all of the risk management products available. As we said above, every organization is different. A strategy or solution that works for one business might not be the best one for you. Take your time when speaking with foreign exchange providers and make an effort to discuss all of their product offerings.
  5. Getting overwhelmed by complex administration. If your organization is responsible for handling a high number of transactions, the day-to-day processes could be distracting from the bigger picture (and potentially, bigger issues). A foreign exchange provider can help your business to reassess your processes to better suit your business’s needs.
  6. Not having a handle on compliance. Strict regulatory compliance is absolutely necessary for any business that deals with foreign exchange. But from varying national requirements to potentially time-consuming processes, compliance can be difficult for businesses that don’t have the right expertise or resources, and can lead to regulatory delay.
  7. Poor internal communication. If your team members aren’t communicating well with one another, it will be very difficult for your business to make decisions that are best for the business as a whole, and could even lead to conflicting decisions being made by out-of-sync managers.
  8. Working with a foreign exchange provider stuck in rigid processes. Just working with a foreign exchange provider won’t guarantee good results for your business. You should work with a foreign exchange provider that understands your business’s needs and offers variety and flexibility in its solutions. A provider with limited, inflexible offerings may not be able to offer your business what it needs to reduce its risks.
  9. Not shopping around for the right foreign exchange provider. Continuing from our last point, we’d like to emphasize that the right foreign exchange provider will understand your needs and have the expertise and resources to help your business achieve its goals. Don’t settle for the first provider you meet with. Take some time to explore your options and find the one that is best-equipped to aid your business with its foreign exchange risk.

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multibillion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

 

Source

When Should I Make a Money Transfer?

14-05-2020 | treasuryXL | XE |

We’ve previously gone over why you should choose money transfer over other methods of sending money, and we’ve discussed how to start your transfer. But one question we haven’t answered is, “When should I make a money transfer?”

Everyone’s circumstances are different, and whether it’s the right time to make a money transfer will depend on you and your needs. But what we can share with you are some of the circumstances in which money transfer is the safest, fastest, and most convenient option for sending money internationally.

Sending Money to Loved Ones at Home (or Abroad)

Whether you’ve moved abroad for school or work or your loved ones have relocated to another country, there could come a time when you’ll want to send money to one another (particularly if you’re supporting your family or you have a dependent abroad). You could take the low-tech route and send money through snail mail, but not only will you have to wait quite some time for it to be delivered, there’s also the potential of it being lost or tampered with in transit.

For these types of situations, money transfer is ideal because you can trust that the money will reach your recipient quickly, and be completely secure during the trip.

Putting Money in Your Own Account in Another Country

Yes, you absolutely can transfer to yourself! If you frequently travel between your new home country and your old one, you probably still have a bank account back home. If you want to keep a sum of money in that account and continue to build your savings, you can transfer directly to your own account. You can build up your savings from overseas, and you won’t be privy to the potentially unfavorable exchange rates you might get if you waited to exchange through your local bank.

If you’re looking to maximize the amount of money you can put in your account, you could set up a Rate Alert to let you know the best time to transfer. No need to constantly check the markets—XE can do that for you.

Making International Payments

You might be making payments to another country. You could be an employer paying employees located overseas, you could be making investments, or you could be making payments for educational fees, medical bills, mortgages, or pensions. Regardless of why you need to be making the payments, using an online money transfer provider to make your payments will ensure that your payments always arrive safe and sound by their deadline.

Additionally, if you’re in a situation where you need to make these international payments on a regular basis (for paychecks or mortgage payments, for example), you can set up a recurring series of payments through Regular Payments Abroad. For just a one-time setup, you can rest assured knowing that your payments are queued up and ready to go.

Exchanging Currency

Think about the last time you traveled to another country. Did you have their currency on hand? It’s more likely that you needed to get a supply for your trip. Exchanging money at your local bank, at an airport kiosk, or at a bank or ATM at your destination are all usable methods, but they’re not the best for one reason: rates.

Banks and other currency exchange services set their own exchange rates. It’s great for them, but it might not be as great for you. The rate will favor the institution, and you might not get as much bang for your buck when you exchange.

If you choose to get your currency ahead of time with an online money transfer, however, you can trust that you’re getting the fair, honest mid-market rate. What you see is what you get: no hidden service fees anywhere.

In short…

If you need to take the money you have and exchange it to another currency, an international money transfer is the best option for several reasons:

  • You can trust that your money will arrive at its destination safe and sound, with your information completely secure;
  • Your money will arrive at its destination quickly, within a few business days (but often sooner), and you’ll know exactly when it will arrive so you can plan for any payment deadlines;
  • It’s easy to do online from anywhere, and can be initiated 24 hours a day, 7 days a week.

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multibillion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

 

Source

Send to Receive: Money Transfer Timings Explained

07-05-2020 | treasuryXL | XE |

One of the most common questions XE receives is, “How long does a money transfer take?” As much as XE wish they could immediately come back with a definitive answer, there’s no one-size-fits-all answer for the length of time between you hitting “Confirm transaction now” and your money transfer arriving at its destination.

In general, your transfer will be completed within 1-4 business days. The reason for this range is because no two transfers are alike, and the details of your transfer—such as how you’re paying, where you’re sending your money, and the currencies you want to exchange—can all impact the length of your transfer.

Who is Transferring

XE requires you to provide additional documentation before you can make a money transfer. If they need this information from you, don’t worry: they will reach out to you by email to let you know what they need from you.

If you get this email: all you need to do is log into your account, click “Upload Documents”, and upload a copy of your passport, driver’s license, or national ID.

 

It should only take a few minutes, and we’ll let you know as soon as you’re good to go.

Where You’re Transferring

Where you’re sending your money could also have an impact. You won’t need to account for the physical distance your money is traveling (money transfer is a transfer of information), but there’s no guaranteeing how quickly your recipient’s bank can process the transfer, whether your transfer will need to travel through an additional intermediary institution, or what kind of payment method your destination might require. All of these could affect how long it takes to complete your transfer.

When You’re Transferring

You can initiate a money transfer online or in the app 24/7, 365 days a year. However, because money transfers typically run through banks and other financial institutions, they will be privy to these institutions’ working hours. So if you initiate your transfer late at night or on a bank holiday, you might see a small delay.

And it’s not just the banks: check the calendar for your destination as well. National holidays can affect your transfers in addition to bank limitations.

How You’re Paying For Your Transfer

There are three ways you can provide the money for your money transfer: credit or debit card, wire transfer, or ACH payment. The time to receive these payments will vary: both card payments and wire transfers are quick, and typically get your money to use within 24 hours. ACH payments can take a little longer to settle due to the number of parties involved in the payment.

What’s important to remember is that your payment and transfer date will not be kept secret. When you initiate a transfer, we’ll let you know the soonest possible date we can send your transfer.

Here’s what you’d see if you attempted to initiate a money transfer on April 29, at about 5:00 in the evening:

ACH Direct Debit

Wire Transfer

Credit or Debit Card Payment

Even after you’ve confirmed your transfer, XE will still be in touch. They will let you know by email when your transfer has been sent as well as when it’s arrived with its recipient. No matter what, when, where, and how you’re making your money transfer, XE provides you with the best simple, secure, and smooth experience.

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multibillion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

 

Source

Types of Money Transfer: All About Market Orders

01-05-2020 | treasuryXL | XE |

Last week, we explored the wonderful world of forward contracts. And for those of you who wanted to take advantage of a potentially favorable current exchange rate but didn’t need to make a money transfer right away, forward contracts could have been the answer to your transfer troubles.

But what happens if you want to make a future transfer, and the rates aren’t in your favor? Are you left with no option but to just sit tight and hope that the markets eventually move towards the rate that you want?

Don’t worry, that’s not your only option. Instead, you can set up a market order that will allow you to target your ideal rate.

What is a market order?

Remember how we described forward contracts as the “buy now, pay later” transfer option? Market orders would be the “buy now, transfer later” option.

When you make a market order, you can specify your target rate at which you’d like to exchange your currencies. The current rate doesn’t matter: the markets are constantly moving, and you’ll never know when your desired rate will be live.

After you’ve placed your market order and set your target rate, your work is done, and now it’s up to the markets. Once your rate is live, your money transfer will send, allowing you to transfer currency at your ideal rate.

What’s the difference between a market order and a rate alert?

If you’ve set up a rate alert before, you might think that this sounds a little familiar. And it’s true: both rate alerts and market orders are tools that can help you improve the efficacy of your future money transfers. The difference is all in their names.

  • A rate alert is an alert letting you know that it could be time for a transfer. It informs you that the rates are in your favor, but it’s up to you whether you want to make a transfer at this time. If you regularly make transfers (for purposes like sending money to an account in another country or loved ones abroad), rate alerts will let you know when the best time to do so is.
  • A market order places an order for a future transfer. You’ll enter your currencies, amount to transfer, and desired exchange rate, and the transfer will initiate once the rate is live.

When would I want a market order?

Depending on the currencies you want to transfer and what’s going on in the world at the time, your currencies could be subject to quite a bit of volatility. If you’re contending with frequent market motion, setting up a market order can help you to ensure that you’ll be able to make your transfer at the best possible rate, whenever that may be.

Market orders are also a great option for transfers that aren’t time-sensitive. Some transfers (such as bills or educational payments) need to be made by a certain date, but if your transfer doesn’t come with its own hard deadline, you can take advantage of market orders to make the most of your money in your transfer.

How do I set up a market order?

Ready to set up a market order? It’s no more complicated than sending any other money transfer. If you don’t have an account, take just a few minutes and sign up for your free account first. If you’re already registered, visit the Money Transfers page to learn more about how you can get started.

 

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multibillion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

 

Source

Online training 5 en 6 mei 2020: Beheer van wisselrisico’s

| 23-04-2020 | Francois De Witte

Online training op 5 en 6 mei 2020 van 9.00 tot 12.00 uur.

Zaken doen is onvermijdelijk verbonden met het nemen van financiële risico’s. Het komt erop aan deze op een verantwoorde wijze te beheren.

Omschrijving

Het is belangrijk om deze risico’s te identificeren en te kwantificeren (aankopen of verkopen in vreemde munten, klanten risico’s, beleggingsrisico’s, cash flow risico’s, …). U moet beslissen in welke mate deze risico’s kunnen worden vermeden, aanvaard, getransfereerd  naar derden of ingedekt worden door verzekeringen, wisselkoersinstrumenten, …. Hiervoor moet u beschikken over de nodige kennis van de juiste verzekerings- en indekkingstechnieken en het gebruik ervan begrijpen. Hoe organiseert u een performante controle, opvolging en rapportering van de risico’s. Dit programma focust dus op een goed inzicht in de diverse financiële risico’s met, de impact hiervan op uw bedrijf, de mogelijkheden om ze in te dekken, met de focus op de wisselrisico’s.

Voor wie is deze opleiding bestemd?

Deze module richt zich tot bedrijfsleiders, alsook alle financieel verantwoordelijken, treasurers, leden van het treasury team, controllers, financieel adviseurs, accountants, relatiegelastigden ondernemingen bij financiële instellingen.

Voorkennis

Financieel basisinzicht en ervaring met financiële transacties is vereist. Voelt u zich hier nog onvoldoende mee vertrouwd dan kan u voorafgaand de opleidingsmodule ‘Cash- en werkkapitaalbeheer’ volgen.

Programma

1. Financieel risico management: algemeen

  1. Definitie
  2. Identificatie, kwalificatie en kwantificatie van de risico’s
  3. Risico tijdslijn
  4. Verzekerings- en indekkingstechnieken: instrumenten
  5. Risico politiek: strategie en tactiek
  6. Risicomanagement: procedures, opvolging, controle en rapportering

2. Wisselkoersrisico’s

  1. De financiële markten – algemeen
  2. Type exposures: transactie, boekhoudkundig en economisch
  3. Natuurlijke indekkingen
  4. Interbancaire markt versus futures
  5. Instrumenten voor de indekking van de wisselrisico’s
  • FX: Spot (contante) indekking
  • Forward (termijn) indekking
  • Currency swaps
  • Valuta-futures
  • Valuta-opties
  1. Contractuele aspecten – ISDA documentatie
  2. Bancaire aspecten: risicoweging
  3. Regulering
  4. Boekhoudkundige aspecten
  5. Aanbevelingen
  6. Case study in groep

 

Schrijf je hier in voor de training

 

Money Transfer Spotlight: What You Should Know About Forward Contracts

23-04-2020 | treasuryXL | XE |

XE said it before: not all money transfers are created equal. Depending on…

  • How much money you want to transfer,
  • What currencies you want to exchange,
  • When you want to make your transfer, and
  • Whether you want to take your time to get the best possible rate

…the type of transfer that’s best for you could vary.

When you just want to make just one quick transfer on the spot, without any additional considerations or extra hassle, a simple spot transfer will make the process quick and simple. If you know you’re going to be making multiple transfers on a consistent basis, Regular Payments will ensure that you can make all of your payments, without having to worry about entering the same information ad nauseam.

But let’s say that you know you want to make a money transfer, you know how much you want to transfer, and the rates are good, but you’re not quite ready to send it out. In that case, you’ll probably want a forward contract for your international money transfer.

What is a forward contract?

In a forward contract, you’re making an agreement to transfer:

  • A predetermined amount of a certain currency
  • To another predetermined currency
  • At a predetermined date
  • At a locked in currency exchange rate.

In short? You let us know what you’re exchanging, how much you want to transfer, and when you want to make the transfer, and your transfer will be sent on that date. So if the rates are in your favor but you aren’t planning on making a payment or purchase just yet, you can still take advantage of the favorable rate without having to make your full transfer.

We like to think of forward contracts as the buy now, pay later option. You’ll pay a small deposit now, but you won’t make the bulk of your payment until your set transfer date.

When would a forward contract be the right move for me?

Forward contracts are a great option if you’re worried about potential fluctuations in your currency pairs. Sure, you could just wait until you’re ready to make your payment or purchase to make your transfer, but you can’t guarantee that you’ll like your rate when the time comes.

Are you planning on making any larger purchases, particularly property or investments? You can ensure you’ll get the most for your money if you lock in your good rate now, even if you won’t be making your transfer for months.

How do I set up a forward contract?

Setting up a forward contract is no more complicated than any other money transfer. Ready to get started? Visit our Money Transfer page to learn more about our options and how we can help you initiate your transfer.

 

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multibillion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

 

Source

Money Transfer vs. Wire Transfer: What’s Really the Difference?

17-04-2020 | treasuryXL | XE |

And is there really a difference? The two methods follow the same process. You have someone that you want to send money to, and sending cash in the mail isn’t going to cut it. So, you take your money to another service provider, pay them, give them your recipient’s information, and let them take care of the heavy details. Within the next couple of days, they’ll receive the money and you’re all set until your next transfer.

For a lot of customers, the biggest difference is where you set up the transfer. Wire transfers tend to run through banks, while money transfers are facilitated by other providers. It seems like a no-brainer: you already go to your bank for other financial matters, and you trust them to handle your money and information.

But is that really the best option? Let’s take a few minutes to explore the difference between wire transfer and money transfer, and what that means for you (and your wallet).

Wire Transfer

Wire transfers are a form of electronic funds transfer (ETF) that travel through banks and financial institutions. And though we used the word “travel” in the previous sentence, there’s no physical money transport. Instead, your bank verifies that you have the funds for the transfer and sends information through the SWIFT system to your recipient’s bank that will tell them to credit their account with the funds.

Money Transfer

Like wire transfers, money transfers don’t transport any physical money but transmit financial information between the relevant parties. But as we said above, money transfers don’t go through banks (though), and they use their own communication systems instead of using the SWIFT system.

So, what’s the difference?

Is how they send the money the only real difference? That is the biggest difference, but it also leads to a few smaller (but important) distinctions. Traditional wire transfers and online money transfer differ in these key areas:

  • Depending on your bank, you may or may not need to set up your wire transfer in person. Electronic money transfers, on the other hand, can be initialized online, often any day or time.
  • The SWIFT system and other systems function in the same way, but SWIFT system transfers require a fee for using the system. Online money transfer can vary; some providers will have third-party fees, while others have just a small service fee.
  • SWIFT fees aren’t the only fees. Wire transfer is typically considered a premium service, and comes with a higher price tag than other services. When a money transfer provider doesn’t involve any third parties, the fees will be much lower.

Now that you know the difference between the two services, you’ll know which questions to ask your provider and what to look for in a transfer provider.

 

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multibillion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

 

Source

What are my International Money Transfer Options?

09-04-2020 | treasuryXL | XE |

When you break it down, all money transfers follow the same core process:

  1. You select your currencies and get your rate,
  2. You provide your information and that of the recipient,
  3. We facilitate the transfer.

However, they aren’t all created equal! Where they differ is when you pay and when the transfer goes out. Depending on why you’re making your transfer and whether you have any time constraints, one type of transfer could suit you better than others.

We’ll start by discussing these three transfer methods:

  1. Spot transfers
  2. Forwards
  3. Market orders

Let’s take a closer look at what these transfers are and when they’d be best utilized.

Spot Transfers

If you just want to make a quick, “on the spot” transfer, you can immediately do so through our spot transfers. You can buy now, pay now, and get your transfer taken care of ASAP. There’s nothing that will affect the transfer process.

When would I use this? Any time you need to make a quick, one-off payment or transfer, and you know you’re ready to send. If your transfer needs are more complex, one of the next two options might be better for you.

Forward Contracts

You’ve got a dilemma. You’ve checked the currency conversion charts, and the rate is in your favor for your transfer—but you’re not quite ready to take the plunge and initiate the transfer. Maybe you’re still building up your savings, maybe you’re still finalizing the details of your upcoming purchase, or maybe you’re concerned about potential fluctuations in your chosen currency.

A forward contract will let you lock in your rate now, even if you aren’t planning on making your purchase just yet. You’d just pay a small deposit now, and the bulk of your payment at a future date.

When would I use this? If you’ve got a big purchase to make, like property or another investment, and you want to make sure you’ll have a great rate.

Market Orders

Let’s flip the last scenario around. You know you want to make a transfer, but you’re not happy with the current exchange rate. Instead of putting your transfer on hold completely, set up your future transfer now with a market order. Specify your currency amounts and desired rate, and the transfer will initiate once that rate is live.

When would I use this? Got time to spare for your transfer? Making a transfer to or from a more volatile currency? Market orders are ideal for those of you seeking the best possible rate, while time is less of a factor.

What about those other transfer types?

If you’ve been researching money transfer, you might be thinking, “Those aren’t the only types of transfer. Why aren’t you mentioning the other types?”

The three transfers described above are all forms of international money transfer that you can easily make on our platform. These other transfers will move your money to another person, but they differ in whether they’re international or domestic, whether there’s any restrictions on the amount you can transfer, and whether they come with an additional fee.

For example, you may have heard about the following:

  • Bank transfer – This refers to any money transfer that is done through a bank. Banks are trustworthy and reliable, but because they utilize the SWIFT network, bank transfers come with numerous additional fees.
  • Wire transfer – One of the oldest and most widely known varieties of domestic and international money transfer, wire transfer allows you to electronically send funds to another person through banks or other wire transfer providers. Wire transfers go through networks such as the SWIFT network, so while they are speedy and secure, they often come with added fees.
  • Money order – This is a paper document that’s used for making payments, not unlike a check. The main difference is that you specify who will receive the money order and how much they will receive, and both you and the recipient must sign for the order. Money orders are a secure way to make domestic and international payments, but they often have a limit of $1000 per order.
  • Cashier’s check – Like money orders, cashier’s checks are a slightly more secure alternative to regular checks. Unlike money orders, you can make larger payments with cashier’s checks, and many people use them to make a down payment, put down a deposit, or purchase high-cost items like cars or boats. Cashier’s checks function by taking the check amount from the paying individual’s account and depositing it into the bank’s account, and then creating a check that draws directly from the bank or institution. The recipient is guaranteed to receive their money, and transactions can settle quickly.
  • ACH payment – Also known as an ACH transfer, this is a direct deposit transfer that is processed within the United States through the Automated Clearing House (ACH) network. While they are quick and easy to manage, they are largely domestic, and would not be the best option for anyone with international transfer needs.
  • Balance transfer – This one’s a bit of a trick—balance transfers aren’t really money transfers. In a balance transfer, you’re transferring outstanding debt on one credit card to a new or different card, typically one with a lower interest rate or other benefits.

How do these other methods compare to Xe money transfer?

Now that you know a bit more about the various types of money transfer, you might be considering what would best suit your money transfer needs.

Here are some of the most important considerations when making a transfer:

  • Speed. Bank, wire, and other transfer types could be delayed by limited hours or holidays. Most online money transfers are completed within the day, and can be initiated 24/7/365.
  • Fees. Banks and other providers will often charge additional fees on top of the initial transfer fee. These fees can add up! When you make an online money transfer, you can trust that you won’t encounter any surprise fees after confirming your transfer.
  • Location & Currency. Not all of the methods listed above facilitate international transfers, or they may not transfer to your country or currency of choice. We conduct transfers to 170 countries in every major world currency.
  • Rates. Not every institution calculates their rates the same way. Our rates come from the live markets and are accurate to the minute, while other institutions may use rates more in their favor than yours.

Now that you know a little bit more about your options, you can choose the type of transfer that best fits you and your needs.

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multibillion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

Source

How to Recognize and Avoid Online Fraud Attempts

02-04-2020 | treasuryXL | XE |

It’s safe to say that we all have a lot on our minds right now. Unfortunately, whenever there’s a situation that causes people to feel uneasy and panicked, there will be fraudsters and criminals who take advantage.

We have recently seen a surge in demand for our services, and in that surge there have also been vulnerable customers that have been manipulated by opportunists. In addition, the recent uptick in fully remote and online work has also opened doors for online scam and fraud attempts.

At XE, keeping our customers and their personal information safe is our greatest priority. We want to help you to protect yourself from fraud attempts. Take a few minutes to familiarize yourself with some of the most common online scams, and read through our tips to keep yourself and your loved ones safe from fraudulent activity.

Phishing emails

Last year, Microsoft reported that phishing attacks were the greatest online security threat by far, having increased by 250 percent since their previous report.

Usually coming by email, these attacks encourage you to click on a link or attachment and download malicious software, which attacks your device and hacks access to your files. You may also receive an email from someone posing as a trusted figure (such as your employer or a reputable company) and asking you to provide sensitive information.

How to handle these: Verify everything. Reach out to the sender or the company and confirm that this email did come from them. It takes just a few moments, but it can have a huge impact.

Banking and online account scams

Take extra caution when reading an email from a bank. Many scammers send emails or texts that appear to be sent from your bank, highlighting a problem with your account. Often, they will request a verification of your details to resolve the problem. Once they have your details…you can imagine the rest.

How to handle these: Call your bank directly to clarify the issue. Never submit your personal details to this email, or to any email. Most reputable providers will not ask you for sensitive information over email, so that should be an immediate red flag.

Online shopping scams

Online shopping was already on the rise, and now that people are taking the majority of their shopping online, scams in this area have become more prevalent. Scams include selling faulty products, attempting to sell a product to gain bank details, and promising goods at a low price (only for those goods to never arrive and the site to close down after taking your money).

How to handle these: Use your head. If it’s a site or store that you’ve never heard of, research the company and see if you can find verified reviews from other customers. Ask yourself: “Does this seem too good to be true?” If it does, then proceed with caution.

Lottery, competition and inheritance schemes

Say you receive emails stating that you have won monetary prizes in competitions you did not enter, or messages from people overseas claiming that you have inherited money. These are just attempts to obtain your personal details.

How to handle these: Ask yourself, “Did I enter a competition? Do I know these people?” As much as we’d like to believe the fairy tales, winning or inheriting money completely out of the blue is not likely to happen. Once again: if it sounds too good to be true, it probably is.

Charity scams

Scams that take advantage of good-natured individuals often make a special appearance around the holiday season, but these could be active at any time of the year. Scammers will pretend to work for a charitable cause and may even exploit news of a current crisis. Scams surrounding COVID-19 are already in circulation, and seek to prey on people’s fears.

How to handle these: Do your research. If you plan to make a donation, make sure you know who you’re donating to and what your donation will be used for. If possible, make donations only through reputable organizations’ secure sites.

How can you avoid future scams?

When it comes to avoiding online scams, there are some key precautions that everyone should take. Pass these along to your friends, family, and clients, and take a critical eye in your own online habits.

  1. Read every email carefully. Emails are the most common scam vehicle. One way to check whether the message is from a reputable source is by checking the URL before you click. Extra characters and misspellings could both point to a suspicious link. If you’re still not sure, treat it as you would any other scam email. If it’s a sender who claims to know you, check with them before sending money or information.
  2. Never agree to send money to anyone you have only met online. Sending money online is not something you should take chances on. Don’t send anyone money unless you know them personally and are certain that they are legitimate.
  3. Never make a financial decision based on a phone call you receive from a person posing as a relative of someone in prison. This is a common scam that relies on you panicking and rushing to send money as quickly as possible. Take a second to consider the situation. Odds are, it won’t make sense once you think about it. If you’re still unsure, verify the situation with another relative or friend.
  4. Never share login credentials with anyone online. No matter what they promise to do for you in return. No reputable organization will ask you for this information.
  5. Be wary of unsolicited contact. If you don’t know the person or organization who has just contacted you, be cautious while you verify who they are. Don’t respond or provide them with anything until you know they’re legitimate.
  6. Update your devices. If you haven’t been doing this regularly, now is definitely the time to ensure that all of your devices are updated with the latest security measures.

We hope this information helps you and your loved ones to stay safe online. If you need anything, our team is here to help.

Neville Lacey

Global Risk and Compliance Director at XE

Get in touch with XE.com

About XE.com

XE can help safeguard your profit margins and improve cashflow through quantifying the FX risk you face and implementing unique strategies to mitigate it. XE Business Solutions provides a comprehensive range of currency services and products to help businesses access competitive rates with greater control.

Deciding when to make an international payment and at what rate can be critical. XE Business Solutions work with businesses to protect bottom-line from exchange rate fluctuations, while the currency experts and risk management specialists act as eyes and ears in the market to protect your profits from the world’s volatile currency markets.

Your company money is safe with XE, their NASDAQ listed parent company, Euronet Worldwide Inc., has a multibillion-dollar market capitalization, and an investment grade credit rating. With offices in the UK, Canada, Europe, APAC and North America they have a truly global coverage.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page