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Foreign exchange (FX) is an essential part of doing business internationally, but for many SMEs, it’s also a source of unnecessary cost and risk. Many businesses assume they’re getting a good deal from their bank or FX provider, without realising that hidden fees, unpredictable margins, and inflexible contracts could be eating into their profits. At Branta, we help SMEs take control of their FX strategy—reducing costs, improving certainty, and freeing up working capital. This article explores the common pitfalls of FX transactions and how businesses can optimise their currency dealings for better financial outcomes. The Problem: Hidden Costs and Missed Opportunities in FX Most SMEs don’t have full visibility over the costs of their FX transactions. A key driver of these costs is the dealer profit margin —the amount added to the exchange rate by banks and brokers before they sell currency to you. Many FX providers vary this margin from transaction to transaction , making it difficult to predict costs. This margin is technically known as the spread —the difference between the price at which they buy currency and the price at which they sell it to you. For example: If the market exchange rate for GBP/USD is $1.22 and your bank sells you USD at $1.18 , the difference ( $0.04 per £1 exchanged ) is the spread . That may not seem like much, but on a £100,000 trade , this difference amounts to £3,389 in additional cost . Beyond spreads, many businesses also pay: Deposit requirements for forward contracts – Many providers demand an upfront deposit (5-10% of the total trade) to secure a future exchange rate, tying up cash unnecessarily. Foreign payment fees – Banks often charge between £10-£25 per international transaction , which adds up over time. Lack of FX strategy support – Many businesses make FX decisions without expert guidance, leading to higher costs and increased risk. These hidden costs can result in thousands of pounds in unnecessary FX expenses every year . The Solution: A Smarter FX Strategy At Branta, we help businesses improve cash levels by fixing dealer margins , eliminating fees , and introducing strategic FX planning . Here’s how: 1. Securing a Fixed, Narrower Margin on FX Transactions Rather than accepting fluctuating FX costs, businesses can fix a transparent , lower dealer margin , ensuring they always know what they’re paying. Client Case Study: UK Food Manufacturer Our client was unknowingly paying dealer margins ranging from 0.5% to 2% , meaning the cost of their FX transactions varied unpredictably. By securing a fixed , lower margin , they gained certainty over their FX costs and eliminated unnecessary price fluctuations. client Example: Consumable Product Manufacturer Using a High Street Bank for FX Our client assumed they were getting competitive rates by booking FX directly with their high-street bank. However, an analysis of their trade confirmations revealed they were overpaying by £10,000–£15,000 per year due to inconsistent margins. By switching to a provider offering fixed , lower FX margins , they locked in certainty and improved their profit margins. 2. Zero-Deposit Forward Contracts Many businesses use forward contracts to protect against currency fluctuations by locking in an exchange rate for future payments. However, most FX providers require an upfront deposit (often 5-10%), which can tie up tens of thousands of pounds in working capital . Client Example: £500,000 Forward Contract Facility Our client needed to secure USD payments for their suppliers. Their previous provider required a 3% deposit on forward contracts , meaning £15,000 was locked up unnecessarily. By switching to a zero-deposit forward contract , they freed up this cash while still protecting their future FX rates. Client Case Study: Importer Making USD Payments A business making USD payments 2-3 times per year was using a major bank that charged a 3% dealer margin plus a £25 settlement fee per transaction . For a $50,000 purchase , they were paying: Bank rate at $1.18 = £42,372 Alternative provider rate at $1.21 = £41,322 By switching, they saved £1,050 per transaction and avoided settlement fees altogether. Over a year, these savings added up to £3,000+ , simply by improving their FX setup. 3. Strategic FX Guidance and Market Insights Many SMEs navigate the FX market alone, making costly decisions based on guesswork. Having access to a dedicated FX expert can help businesses: ✅ Time their FX trades better with market insights ✅ Set budget rates to protect against unexpected currency movements ✅ Use hedging strategies to reduce FX exposure client Example: Timing a Large USD Purchase A UK business needed to buy £120,000 of USD for upcoming payments. Instead of blindly trading on the day, they worked with their new FX trader to lock in a competitive rate before the market moved against them—potentially saving thousands. 4. Eliminating Foreign Payment Fees Many businesses are unaware that their bank is charging fees on every international transfer. With the right FX provider, these costs can be completely removed . client Example: Spot Trade Savings Our client purchasing USD and CNH from a major bank was consistently overpaying due to inflated margins. A review of their trades showed: £725 saved on a $70,850 trade £44 saved on a CNH 39,500 trade £31 saved on a $4,100 trade Even small differences in the FX margin quickly add up. For businesses making regular FX payments, these hidden costs could amount to tens of thousands of pounds annually . How Much Could Your Business Save? By reviewing their FX strategy, SMEs can often recover thousands of pounds per year . Real-world examples include: EUR purchases: €3.1m per year → Estimated savings: £10,400 per year Deposit savings on forward contracts → £33,000 released back into the business USD purchasing strategy savings → £1,050 per transaction These savings don’t include additional non-financial benefits such as improved planning and risk management . Are You Getting the Best FX Deal? To find out, all we need is three recent FX trade confirmations from your current bank or FX provider . We will: ✅ Analyse your current dealer margin and fees ✅ Show you exactly how much you could save ✅ Offer a simple transition to a better FX solution This review is free and without obligation , but could reveal thousands in hidden savings for your business. Self-Test: Is Your FX Strategy Costing You Money? Do you know the exact dealer margin (spread) you are paying on FX transactions? Are you required to pledge a deposit for forward contracts? Do you pay foreign transaction fees on international payments? Do you have a dedicated FX expert to help guide your strategy? If you’re unsure about any of these, it might be time to review your FX setup. 💡 Contact Branta today to explore how we can help you cut FX costs and gain certainty over your currency transactions.

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