International borders have reopened after over 20 months, with the revival of the tourism and travel sectors marking the next step to approaching a post-pandemic “new normal”. With travel bubbles introduced, it’s only a matter of time before Australians and foreign travellers revisit their long-postponed destination bucket lists.
Whether you’re a tour business, travel agency or vacation rental owner, getting ahead by strengthening your FX strategy can help to ensure you’re well equipped for the influx of returning travellers.
Covering all your FX bases
As a travel vendor conducting business overseas, you may be looking ahead to your first post-pandemic season welcoming back international holidaymakers. Simplifying FX processes can help you maximise cashflow from the uptick of travellers in seasonal periods.
Here are four key FX tools that can help keep your cash flow in check:
- Limit Order (Target Rate Transfer) – helpful for transferring large sums into your local currency after peak seasonal travel periods at a pre-secured rate. For example, if you’re an Australian tour guide operator, you may find it useful to leverage a Target Rate Transfer, which can be great for navigating seasonal peaks. You can set your target exchange rate for a period of six months. When the rate is triggered, the transfer will be completed, allowing you to bypass exchange rate fluctuations and leave market monitoring to FX specialists, so you can focus on your business.
- Spot Transfer – the simplest form of international payment with which you can lock in the exchange rate on the day for any one-off payments necessary to accommodate spontaneous travellers.
- Forward Contract – suitable for helping minimise currency swing impacts for regular payment transfers, such as international supplier and staff payments. This allows you to secure an exchange rate based on today’s rate for a future transfer, up to 12 months beforehand. For example, say you need to pay US$50,000 by a certain date; using a Forward Contract can provide certainty that the invoice amount won’t increase even if the exchange rate moves.
The opposite is also true however. If currencies move in your favour whilst you’ve locked in a rate, you’re unable to benefit, so it’s worth considering your risk appetite. - Global Currency Account – international currencies can be easily managed from one account, which is useful if your travel business operates in several markets.
Speaking to an FX specialist can help you gain clarity on what the best strategies are for your business when managing a network of currencies.
Sorting your currency network
Perhaps as a holiday rental owner, you’re managing multiple overseas properties on top of receiving payments from various currencies, with no time to factor in currency volatility. Instead of having various overseas bank accounts, a multi-currency account can simplify processes by allowing you to make and receive payments in up to seven foreign currencies.
When receiving payments, additional conversion and transfer fees imposed by banks or financial intermediaries can unnecessarily dent your profits. A solution like a global currency account can help SMEs receive payment in some local currencies without automatic conversions between currencies, which may be useful if spontaneous bookings or refunds require quick processing. Additionally, the ability to hold funds in these accounts can be advantageous for businesses seeking more control over FX finances.
The welcome return of international tourism is sure to keep travel SMEs busy over Christmas and into the future; by ensuring all FX bases are covered, you can worry less about managing multiple currencies and currency volatility and focus your energies on international customers making the most of the return of travel.
