Beat exchange rates
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Many of us will be thinking about sending money to Israel this year, whether it be to make vital donations to charities and other organisations, or for private business dealings, property investments or to make mortgage payments and the like.
The global crisis has led both individuals and organisations to rethink their approach to managing money. Less disposable income for everyone has meant that people are increasingly seeking advice from experts in order to protect their finances.
One area which has been hit particularly hard is the not-for-profit sector. Charity managers have already made their concerns about issues such as inflation public in the last 12 months. Research published last year found that around 60 per cent of charities in the UK had been directly affected by the economic downturn. These issues are not helped by the on-going instabilities in the currency markets which have characterised the recent period. The problems in the Eurozone have been well documented, and both the US Dollar and Sterling have also experienced significant movement in their relative value of late.
When receiving money from overseas, this kind of volatility can make a massive impact on how much money you end up with once the transfer has been made.
One of the not-for-profit organisations that I have worked with in recent times is Pardes of Jerusalem, an educational institute of Jewish Studies which relies on foreign donations to survive.
Pardes receives most its income by way of donations in US dollars or pounds, but their outgoings are in NIS Shekels. Bearing in mind the continued volatility of the Shekel, the organisation was looking for a way to maximise their income whilst not having to worry about the impact of fluctuating exchange rates.
A way to achieve this is to employ a "Currency Option", a clever product that allows you to protect yourself by fixing a "worst case" rate, but also allows you to benefit if the rate moves in your favour. Previously the preserve of a few "in-the-know" corporates, these sophisticated hedging products are now available to the general business market, as well as private individuals. If you are involved in large money transfers of any kind, such products are certainly worth seeking out.
People often think about calling their bank first when looking to move money for international transactions, but they have a limited range of services available, particularly for SMEs and private clients.
With on-going turmoil in the Middle East doing nothing to stabilise the exchange rates, planning ahead is definitely worthwhile.
Ben Mitchell is an international currency specialist at foreign exchange brokers, World First.