Contractors' Questions: How to know if euros or pounds are preferable?
Contractor’s Question: When on the road personally and professionally, I’m often asked whether I’d like to pay or receive sums of money in Pounds, Euros or Dollars. I never know how to quickly ascertain what the most efficient currency would be for me to make or receive a payment; is there a formula I can remember or use and what are the likely charges if not?
Expert’s Answer: There is no formula that you can use to assist here unfortunately. The simplest answer is to get paid in the currency that you need and avoid changing it altogether! Unfortunately, this isn’t always a possibility for most contractors and they are rather at the mercy of the end-user.
Retail banks will typically charge anywhere between 3 and 6% to change wage or rate payments, partly due to their overheads and their margin requirements. Foreign exchange brokers, on the other hand, have lower overheads and tend to look to always provide a better rate than the client (you) can get through any existing relationship. Some brokers will even agree a ‘transparent agreed spread’ on all deals /exchanges that you undertake.
As far as the charges element is concerned, some ‘peer-to-peer’ brokers now in the marketplace do have charges applied to transact with them, so be careful to read any small print before you proceed. The majority of regular foreign exchange brokers though have no registration fees and can make payments with no transmission charges attached.
The expert was David Thomas, head of private clients at Global Reach Partners.