A significant portion of a multinational business owners capital gets distributed across a company’s multiple locations. While other aspects of funds would significantly vary depending on the business type, the cost incurred while transferring the same abroad can be controlled.
So, if you want to find low cost ways to send money abroad, this blog is for you. However, before discussing that, you must first have a clear idea of the international market.
Inflation in 2022 and its Affect on Businesses
Inflations are inevitable, and it would occur after a certain period. However, this drastic change in the world economy is something that has left everyone astonished. The pandemic and the Ukraine-Russia war are some of the most prominent reasons behind this. However, there are other factors in play as well.
Energy and food prices are at their all-time high, and economists predict it to increase even more over the coming few months.
While established organisations can figure their way around this situation, small businesses suffer the most. It has even been reported that small businesses have a severe drop in confidence due to this growing inflation. In addition, the lack of substantial capital is a massive concern for them as the prices keep soaring worldwide.
This is especially a big concern for business owners who regularly send money abroad for business purposes.
Inflation’s Effect on International Money Transfer
The nominal inflation rate does not affect a country’s currency much. However, this year’s inflation rates are record-breaking and have indeed affected the foreign exchange market substantially.
This means you might have to pay more than usual to send the same amount abroad or get less for the same foreign payment.
Hence, many companies are now looking for low cost ways to send money abroad to save as much as possible. However, there are certain things you should consider before sending money abroad.
Things to Consider Before Sending Money Abroad
It is not safe to jump and use the first international money transfer option you come across. Instead, since this will be a regular practice, you should familiarise yourself with the different aspects involved in this procedure.
The two most crucial things you need to take under consideration before you transfer money overseas are:
- Exchange Rate
Sending money to a foreign country means converting your local currency to the recipient’s local currency. This conversion will most definitely involve an exchange rate. Therefore, you need to ensure that this rate is strong when you choose to convert; else, you would lose a substantial amount of money.
Exchange rates are volatile in nature, but the fluctuations have become even more drastic in the past few years. As discussed earlier, this is due to the global economic scenario. However, politics and the pandemic also have a role to play.
The exchange rates you will get exposed to are the ones set by a particular foreign exchange company, which might differ from another agency. And you need to compare multiple options to find the one levying the least exchange rates.
- Transfer Fee
Apart from the basic exchange rate, companies would also put a spread on top for their profit. This, too, differs from one money transfer institution to another and might be a lot more than what you have in mind.
Some companies charge a flat fee, while others would take a percentage of the money you are transferring. Depending on the amount you wish to send abroad, either can prove to be profitable for you.
Hence, jumping into the first seemingly profitable offer is never wise. Instead, check your options, calculate which one would cost you less and choose that to transfer your money.
Once you understand what goes about in the procedure, the next aspect of mastering “how to send money abroad” is meeting its requirements.
General Requirements to Transfer Money Abroad
While finding a low transfer fee would reduce your expenditure, meeting the said requirements would ensure you actually get to send the money. Hence, you must know what a bank or foreign exchange might ask for.
The two obvious things that every institution would require are:
- Your Identity Proof
Sending money to another country is no joke. You must prove who you are to the institution for multiple security reasons. However, if you are sending money abroad through the bank you are already registered with, you do not need to prove your identity again.
However, if you have selected one of the cheap ways to send money abroad, ensure you have the following documents.
- Address Proof
- Driver’s License
Note that you only need to produce one of these documents to prove your identity. However, if the amount you are transferring is significantly large, then the company might ask for multiple documents for verification. A sum is usually considered significant if it exceeds the valuation of $10,000.
- Transfer Limit
No two companies have the same amount of capabilities. Hence, they also differ in terms of how much they can send abroad. So, before you select an institution, make sure it can actually help you with your endeavour or not.
This cap limit can also vary regarding how frequently you use a particular company to send money abroad. The more you use their facility, the more trusted you become; in some cases, they would increase the cap for you. Always try to send larger amounts as that would mean you are saving transfer fees of multiple transactions.
Apart from the factors mentioned above, your international money transfer experience can also differ depending on the recipient’s country.
Countries Cheapest for International Money Transfer
Unlike popular belief, the difference in money transfer procedures between two countries is not just due to their varying exchange rates. There are other factors in play as well.
For instance, your choice of company can:
- Have limitations on the countries it can send money to
- Charge different transfer fees for different countries
However, there are some countries where almost every currency exchange sends money with a marginal transfer fee. These countries are:
- New Zealand
- The United Kingdom
- The United States
Although companies usually tend to offer cheaper money transfer facilities for these countries, low cost options are not limited to them.
Cheap Ways to Send Money Abroad
The primary reason why most international money transfer services tend to have heavy fees is due to the manual labour exerted to process one. Hence all the low cost ways to send money abroad are entirely online.
Among all the available options, the most viable ones are:
As one of the most dominantly used money transfer platforms, PayPal does offer significant ease and accessibility. The platform is usually used to send money to friends and family, but you can also use it for business transactions.
It charges a fee of 5% on the amount you wish to transfer and lets you send an amount equivalent to $60,000 at once. However, in some cases, the limit might be as less as $10,000. The application is great for smaller transactions, but if you send a hefty amount, the 5% charge might deduct a lot from the sum.
The platform offers some of the lowest cash transfer fees and operates across 130 countries. However, its rate and fee tend to vary depending upon when and where you wish to send your funds.
So, you must check all your transfer specifications before sending money overseas through this. Just like you can save a lot, you might spend too much too if you are not careful.
- Sterling FX
With 35 years of professional experience with currencies, the Sterling FX specialises in money transfer. The most compelling benefit of this currency exchange is that it charges no commission fee.
It also offers speedy service, making it both cheap and fast. You can also compare the exchange rate it charges with another platform on the site and verify that it is indeed charging the lowest.
Sterling FX has its physical operations but lets you send money abroad completely online. As a business owner, you must make frequent payments to multiple accounts. Hence, it also saves the recipient details to make your second transaction even faster.
The 2022 inflation will increase and affect the global economy even more. If companies, especially small businesses, do not find tactics to cope with this immediately, they would face severe difficulties in surviving as an organisation. So, take your first step towards saving money and only use low cost ways to send money abroad.