Buying and selling abroad
» Trading in foreign currency - Excessive charges from UK banks
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As a small business, one of the most frustrating aspects of exporting is the absolute lack of support from the UK banking system. We are a service provider and about 75% of our business is carried out in Europe or internationally. We operate a Euro account with our UK bank. It is only recently that we have been able to view our Euro account online by subscribing to Bankline Lite. Before that we had to phone the bank (but not our normal banking number) to obtain a balance or to see if an inpayment had taken place. Making payments in Euros from our Euro account would require a trip to a branch and then a simple transaction would take approximately an hour to complete because no one in the branch would know how to do it.
Large organisations have superior currency banking facilities because they have branches overseas. It surprises many people when I tell them there is no such thing as a Euro Debit card available for small businesses. This means that when we travel to our overseas clients to deliver our services our consultants pay for their accommodation, expenses and direct material costs using a sterling debit card (even though we have the Euros in our company Euro account). Naturally, the bank charges us commission (approx. 4%) to convert sterling to Euros. When we get paid (in Euros) we then have to convert the money to Sterling to pay our operating costs (another 4%) commission is taken. This means that we have to charge our overseas clients a price premium making us less competitive. This money goes directly to the bank. Our bank charges (if you take exchange commission into account) total several thousand pounds per year yet those charges never show on any of our bank statements they are just hidden inside the transactions.
Frankly it is disgraceful and a massive disincentive for small businesses to seek to expand their export businesses.