With the ever-present shortfall of time and resources being a constant battle, more SMEs are leaning on the capabilities and specialist expertise of business partners to help them maintain a competitive edge.
Government support is not enough. While the 2021 Budget has allocated $129.8 million to supporting SME and entrepreneurial services, SMEs’ own business strategy and network can help them on their international growth path. In fact, the CPA Small Business Survey 2020 included accountants (39 per cent) and a banking or finance company (eight per cent) as sources of business advice for Australian SMEs.
So, how can financial partners help you navigate unfamiliar international markets and what capabilities should they have to support you effectively?
Expanding internationally comes with a whole new set of financial considerations, from juggling multiple currencies between your company base and overseas suppliers and customers, to understanding how economic impacts in other markets can affect your own business’s ledgers.
When selecting an FX partner that will walk beside you on the journey of cross-border trade and business growth, there are some factors about their capabilities to consider:
Added human and digital support
Having specialists as an extension to a SME’s core team can ease workflows and offer value-add insights, particularly when covering a lot of international ground. FX specialists can keep a close eye on what’s happening in key markets and share relevant intelligence that can help a small business make informed decisions about their FX strategy.
Digital innovation investment
SMEs functioning on lean operations can be hesitant to funnel cashflow into anything outside their core offering. However, working with financial partners with an established global footprint can enable SMEs to tap into a greater breadth of investment in digital innovation that can be leveraged to elevate the business.
Assess where your financial partners are investing digital spend to determine where they can support business operations.
If you’re an eCommerce business for example, specialist plug and play solutions such as a multi-currency account can integrate with global marketplaces and online payment gateways, which could save you from unnecessary conversion fees.
Rigorous risk and compliance
Conducting business online and globally presents opportunities for a team members’ human error to result in legal consequences or sub-optimal currency exchanges with other markets.
Rigorous risk and compliance are non-negotiable, not a nice-to-have. That’s why, beyond the regulatory requirements associated with being an ASX-listed company, OFX is monitored by over 50 regulators globally. It’s essential to determine whether your FX partners have the appropriate standards, processes and solutions in place to meet or exceed regulatory requirements across different regions if you’re looking to grow your business globally.
Specialist knowledge and resources
While many time-poor business leaders assume it’s easier to combine all business banking within one institution, having specialist FX knowledge to help minimise your business’s currency exposures and get an excellent exchange rate on your global payments is crucial when operating between global markets and can have a big impact on your bottom line.
On the digital side, leveraging resources like the OFX Currency Risk Exposure calculator can identify where businesses could save thousands by making strategic decisions about invoicing schedules to overseas suppliers. For example, the online tool reveals that a wholesale trade business’s USD$100,000 monthly invoice could have cost as much as AUD$131,876 and as little as AUD$127,197 in the space of three months – a difference of AUD$4679*.
It’s certainly worth doing your research into how the services of specialist financial service providers compare to traditional banking providers to help make informed decisions as you expand your business’s presence in the global arena.
*Disclaimer: Customer transfers use OFX’s Customer Rate and this, combined with other factors such as different currency exchange amounts, currency types, dates and times will result in different actual costs. These results therefore may not be indicative of actual savings and should be used only as a guide.