Foreign exchange and trade finance solutions for your business

Increasingly, Australian businesses are taking up opportunities to buy and sell in overseas markets. International trade may open exciting new options, whatever the size of your business.

“Australian presence in import and export is strong,” explains Carolyn Thomas, Head of Financial Markets Sales at Bendigo Bank. “Every day we are seeing the importance of international markets to many parts of our customer base. This ranges from smaller to larger businesses.”

“Our customers are not only exporting goods,” Carolyn notes. “They are also entering international markets through consulting, software, artificial intelligence and other virtual products.”

But international operations are more complex than working domestically. This may be daunting if your business is starting to look at overseas markets. Some common challenges are related to foreign currency exchange. Other issues relate to trade finance – managing cash flow and funding in trade with overseas partners. You may have questions about managing currency risk, or ensuring you have predictable prices for your goods or services. And how can you make sure payments are made on time, working globally?

When it comes to managing foreign exchange and trade finance, access to the right banking products and services can help to mitigate risks and challenges. It can also help your business save money and streamline your international operations.

What do businesses using FX need to know?

FX, or foreign exchange, simply refers to any context in which one currency is exchanged with another. For example, you might exchange currency if an overseas supplier requires payment in a foreign currency or an international buyer pays in their own currency.

There are many new considerations for your business in working with FX. You may need to deal with overseas banks. If you have customers or suppliers in several countries, you could be working across multiple currencies. And you may need specialised accounts or banking products to help you work efficiently. It helps to understand some of the key concepts and tools in this area.

Foreign exchange value today refers to the conversion of one currency into another, at a specific rate. Rates are set by the market and fluctuate. Certain currencies might be more or less valuable at a given time.

If you regularly buy or sell in overseas markets, then fluctuations in foreign exchange value could have a big impact on your bottom line. Inputs you purchase using a foreign currency might suddenly become more expensive, or the effective price you get for your product or service could change as exchange rates vary.

One way to manage these risks is a forward exchange contract. This is an agreement made to exchange an amount in one currency for another at a future date, locking in a specified exchange rate.

Some businesses choose to enter into a forward exchange contract. This may provide certainty about the price they will pay or receive for goods or services, to help with budgeting and planning. It can be useful if you trade in fluctuating currencies or know that a sudden change in costs could have a big impact on your business.

A foreign currency account lets businesses that regularly receive foreign currency amounts to accumulate this in the foreign currency. They can use these funds to make payments in foreign currency or convert them at a time when the exchange rate is favourable. It can also help to avoid multiple transfer payments, as they don’t have to convert to AUD straight away.

How can you manage FX for your business?

If you feel comfortable managing FX yourself and want the convenience of an online platform, then online FX may be for you. It is an electronic dealing system, which allows approved Bendigo Bank business customers to buy and sell foreign currency via our e-banking platform.

This allows you to monitor exchange rates yourself. You can book FX conversions at a time that suits you, including outside standard business hours. It’s also easy to view the deal history and email or print receipts.

Once online FX is set up, it can be accessed using your existing e-banking access via a desktop, mobile phone, or tablet.

Use the FX specialists

If you’d prefer to have experts managing your foreign exchange, then the Bendigo Bank FX Team has dedicated FX transaction services. These are available to businesses who require a minimum amount of AUD100,000 in FX conversion each year.

Whichever option you choose, Bendigo Bank offers competitive business FX rates and local business specialists to provide support and services. You can draw on advice for navigating the world of international trade and market insights.

How BroadSource Australia uses FX solutions to drive its IT business

BroadSource Australia Pty Ltd provides IT solutions to assist with cloud-based collaboration. With remote staff based globally, this Melbourne-based company works with telecommunication service providers across Europe, the UK, North America, and India.

The company’s reach across continents means that it operates across multiple currencies. To manage this, BroadSource uses Bendigo Bank foreign exchange solutions, including foreign currency accounts.

Jacqui Thals is the Business Administration Manager at BroadSource. She explains why the company chooses to work with Bendigo Bank to meet their FX needs. “I know most of the people in the FX team. We have personalised relationships, and they offer an incredible service.”

Jacqui can use online FX to meet most of her FX needs, while drawing on Bendigo Bank’s expert team for advice and troubleshooting. “If anything comes up with our FX, I can speak to someone at Bendigo immediately. This contrasts with the European bank we need to work with, where it’s a nightmare if there’s the slightest issue.”

Trade finance

As well as dealing with FX, trading overseas requires management of cash flow and documentation. Again, it’s important to have the right tools and support to mitigate risks like non-payment or cash flow challenges. This can help make sure you get paid on time and have sufficient funds to pay suppliers. You may also need support to manage the administrative requirements of trading internationally.

“Trading overseas provides great opportunities, but can be much more complex,” says Carolyn Thomas. “There are logistics to consider including shipping, customs, and import/export documentation. You may also need new tools to assist with cash flow management and proving your ability to pay to new suppliers.”

One important tool is trade advances, which are loans for periods of up to 180 days. This provides funding for import, export, or domestic stock purchases. Trade advances are available in a range of currencies. They can assist with cash flow requirements within a business’ trade and cash cycles.

Bendigo Bank can support eligible businesses with an international bank guarantee. This is a guarantee made on behalf of an importer that payment will be made for goods. The guarantee provides certainty to the exporter in a situation where there is default on a contract by the importer.

You can also access help with required documentation. For instance, you may need documentary letters of credit. These are provided to a supplier by a bank, on behalf of an importer or exporter in Australia. They ensure certainty of payment upon presentation of required documents.

Documentary collections is the coordination and provision of export or import documents. There are well-established bank-to-bank document transmission processes. These provide greater control over international payments.

Accessing FX and Trade Finance solutions

Bendigo Bank has a specialist team of dedicated FX and Trade Finance specialists. They work to assist business in setting up systems and day-to-day management. You can also access strategic advice to help you save money, manage risk, and streamline your operations. This means you can feel confident in taking advantage of new global opportunities.

FX and trade finance advice and support from Bendigo Bank gives you more time to focus where your expertise lies – your business.

Your business matters. Make an enquiry today.