International funds transfer: strategic foreign exchange for businesses. (International Affairs Section).(Brief Article)

Today's global economy and technological advances are allowing more American businesses to effectively conduct business in the international marketplace. While this has created opportunities for even the smallest companies to compete with their larger counterparts, it has also brought to the surface new financial and operational concerns for American businesses.

Before seeking international opportunities, companies should ask themselves a series of questions, including: Is it easy and convenient to convert to and from international payments and collections when necessary? How easy and efficient is it to send money across international borders? Are you competitive with others in your industry in terms of local currency pricing? if you are not overwhelmingly confident with your answers to any of these questions, seek the advice of a qualified foreign exchange advisor to begin educating yourself about the advantages of foreign currency strategies.

More simply put, any company conducting business overseas must remove the blinders and consider various foreign exchange strategies and alternatives. Although foreign exchange is widely held to be shrouded in complexity and mystery, it need not be, especially since it can significantly impact a company's financial position. There are sound strategies and products that can help businesses ensure they are making the most of their international opportunities.

This is especially true when a company purchases goods or services from a foreign vendor, and it is time to pay. Often, the first instinct for a company with little or no experience in international business is to settle invoices in U.S. dollars. While there are times that this may be appropriate, executives who negotiate and settle exclusively in dollars can unwittingly be subjecting their organization to significant financial risk and increased expense.

If a U.S. company is paying a foreign vendor in dollars, the overseas beneficiary will invariably be converting them to local currency. Moreover, fluctuating exchange rates can lead to hidden surcharges imposed by the overseas company to guard against any potential decrease in the value of the dollar. By utilizing basic foreign currency products detailed below, companies can easily avoid some of this risk.

International Funds Transfer (IFT)

An International Funds Transfer (IFT) represents the fastest, most secure and inexpensive method of transferring funds internationally, especially when denominated in the beneficiary's local currency. Accessible at most large financial institutions, an IFT electronically transmits payments overseas, with funds generally being available to the beneficiary within 24 hours. An additional benefit to both payee and recipient alike is the ability to track payments, just as you would with an overnight delivery service.