International payment bank charges hinder small businesses
Bank charges on international payments are hampering small businesses, according to a new study by Covercy.
The research claims that many firms are paying more than is necessary, especially given that traditional banks have a hold over 95% of the business payments market.
It is suggested that a company that completes 20 monthly transactions of £30,000 or more could overpay by £4,400 on a monthly basis, or nearly £53,000 annually on unnecessary fees.
If those 20 transactions are worth £10,000 each time, then they will overpay by more than £25,000 while a company conducting the same number of deals worth £1,000 each will pay £13,200 unnecessarily.
Importers have also been hit by the falling value of sterling when compared to the dollar and the euro – it has fallen by 16% and 18% respectively year on year.
When coupled with cross-border fees for deals, it means that the UK’s small businesses are seeing needless pressures placed on their finances.
Of the 53,000 SMEs that export in the UK, 69% make at least 20 transactions a month – meaning they are facing additional costs from their banks.
Covercy CEO Doron Cohen suggests that Brexit has promoted uncertainty among UK firms as 96% of exporters deal with the European Union.
He adds that the potential for new costly taxes could damage the competitiveness of British businesses when compared to their European rivals.
This could potentially slow growth as firms can ill afford to readily invest given the nature of their financial situation.
A firm in difficulty can still continue trading by assessing the range of alternative finance options and innovative methods that are available.
Businesses should also assess their current operations to ensure that they are as cost effective as possible – fees for cross-border transactions could be one areas where costs can be cut.
Considering a currency broker could be one option for firms completing a lot of international deals, as they can provide more competitive solutions than may be available elsewhere.
By Phil Smith
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