International payments for life science and biotech businesses

Currency accounts

If you expect to be receiving funds in a particular currency, say you have a buyer who is based in Europe - then it's a good idea to have a receiving account for that currency.

Having foreign currency accounts will save you the costs of having to transfer small amounts frequently, for which the bank charges are usually higher than larger value payments, as well as giving you more control over company funds.

An alternative would be to invoice your buyer in your native currency, but this is effectively passing on the cost to them and thus pushing up the costs of your products and may well impact business.

Forwards

If you intend to make a big purchase from a supplier or convert a large sum of grant money at a certain date in the future it might be a good idea to secure an exchange rate in advance so you can plan your costs with confidence

A forward contract (which we call 'Flexible Payments' at Money Mover) allows you to lock in a fixed rate for a given time in the future, at the expense of sacrificing an exchange rate move in your favour. The benefit of this being you can forecast with confidence and avoid a potentially devastating loss caused by exchange rates moving against you.

Currency exposures

A UK based business sourcing its raw materials locally and selling its products in Sterling may not think that it has any exposure to international currencies. This may well be a mistaken view, however, as there are other factors to consider. 

Does the business have any non-UK competitors? If they're benefitting from a weak currency they're effectively cutting costs, so the foreign exchange markets may be, albeit indirectly, affecting your business.

A 15% strengthening in the pound against the Euro is effectively a 15% reduction in price for any competitors that are sourcing their materials or services abroad. Something to think about at least.

Transparency

Whatever you choose to do about moving and managing your money on an international scale, make sure you know what you're paying!

Foreign exchange is now pretty much the only market where the majority of participants aren't fully aware of the costs. There are numerous "0% Commission" and "Free Transfers" adverts on currency exchange sites but this is likely never the case... a business has to make money right?

It's good practice to check your rates against the mid-market rate (the one you see on the TV news or on sites like bloomberg.com and Yahoo Finance) to see if you're getting a good rate. If the exchange rate being offered is more than a percent outside the market rate then it's likely that you can do better with a specialist provider.