What is the best way to handle payments in the local currency?
I export to North African countries.
My customers want to pay me in their local currency. Which is TND, EGP and LYD.
The amounts vary from hundreds to tens of thousands of the local currency.
I need your advice and experience.
Should I open a local currency account in the country, receive payment into these accounts, then transfer the funds, once they reach a certain level in GBP?
Which banks would you recommend for holding these currencies?
Which service would you recommend for converting these currencies to GBP?
What advantage do you have by holding currency locally? Do you run an office which can use up the cash? I don’t accept ANYTHING other than GBP USD or EURO. Some of the exchange brokers like Cambridge Mercantile will exchange exotic currency. I would talk to some of them.
I agree with Fiona to a certain extent. Let me explain why. Due to the geo-political nature of the places you export to, their currencies are subject to far more volatility than the "major" currencies such as the Euro and US Dollar. That is a "risk" as far as a bank or broker sees it and will therefore demand that a wider "spread" or profit is asked for at the time of the trade to cover that risk.
In addition, it is illegal for some currencies to be traded by converting them into sterling.
In your situation, I would open a US Dollar bank account and invoice in US Dollars, allowing for a certain amount of fluctuation in the GBPUSD exchange rate. Your clients could then pay direct into your account and you could then use a bank or a broker (like us) to repatriate the funds into Sterling. You will be able to get a much better rate by exchanging US Dollars this way and will also avoid a huge degree of paperwork with regards to compliance with UK laws on money laundering etc.
If you have any questions at all please feel free to contact me.
All the Best
Fiona thanks for your reply.
I don’t currently have local offices in these countries. I have commission agents. They work from home or shared office. They get paid in local currency. Yes some of this money is used to pay these agents and for other services. Mainly transport and storage.
I have links with people in the UK from these countries. I can convert some currency through them. As the sums get larger this does not work so well for me. this is why I need to find a competitive service provider that offers good exchange rates.
I have seen CM and one or two others mentioned in these forums before, I’m looking into it. If you or anyone has first hand experience, I would welcome the opportunity to learn from your experience.