Whether you are starting out your own business or already running a successful one, you will find that you have to meet several challenges, including managing finances, controlling costs and building a strong relationship with your customers and suppliers.

For businesses that employ staff abroad or work with overseas suppliers and international customers, there is another important element to consider: currency exchange.  Transferring funds across borders in an efficient, secure, and cost-effective way is an essential part of an international business and should be a priority. For those working within the import and export industry, international money transfers and currency exchange is a daily part of their business and the more complicated it is, the more important it is to find a reliable and trusted currency exchange specialist to assist you with managing your overseas payments.

  1. Why should I choose a regulated and reliable partner?

Currency exchange specialists such as Universal Partners FX provide a platform for easy management of frequent international payments and offer access to competitive exchange rates. Such a broker, with years of experience and regulated by financial authorities, can provide a wide range of products and services, secure payments and peace of mind. UPFX have advanced software, an intuitive platform and can offer superb exchange rates across more than 140 currency pairs, facilitating international transactions in various countries.

Universal Partners FX is the ideal option for distribution and wholesale foreign exchange services, as it can provide valuable support to businesses which want to make regular payments while having access to expert knowledge and strategic financial planning. From monitoring the markets, to developing hedging strategies to protect your business, UPFX’s currency specialists will assist your business and help it grow while saving you time and money.

What exchange rates do you offer?

It is a fact that banks are more expensive and offer higher exchange rates than currency providers. But since there is a lot of competition among currency providers, you can also research and find the best as many might claim to be competitive and advertise that their transfers are free of commission but charge heavy markups on their exchange rates.

For example, when buying currency, you are offered a rate by your bank. This rate might be quite different from other banks or currency providers, and you need to explore various options and understand exactly how much margin is built into the rates. You also need to take into account the service and customer support, as sometimes the cheapest option might not be the best. A tailored approach, useful and friendly customer service and a well-developed strategy for your business should also be considered when making an overall decision.

Especially, if your business has time to plan ahead and can wait to transfer currency, then you might be able to save more money by holding out for a better rate. All of this can be discussed with your currency broker, and explore which option suits your different needs.

  1. How long will it take for my funds to arrive at the recipient’s account?

Transferring funds efficiently is part of a well-oiled operation, and businesses are focused on meeting strict deadlines, setting invoices on time, and paying contractors as agreed to ensure the smooth running of their business. If you have used your bank for currency transfers, you will know of the delays involved, as once your money leaves your bank is sent to an intermediary bank which forwards it on to the receiving bank, creating delays and incurring extra charges. When transferring currency, it is always best to be aware of potential delays or extra costs and plan ahead. A currency transfer business such as UPFX will walk you through the process of transferring funds and shed light on all aspects of your transfer, explaining how long it will take to process a particular transaction.

Trading internationally? Save money with Universal Partners FX

If you are making international money transfers, you will need a cost-effective and secure way to do so. Universal Partners FX is the right partner for your foreign exchange. With UPFX, you can open a multi-currency account, send and receive money worldwide with low and transparent fees. You can also manage your money and send international payments 24/7 through UPFX’s easy-to-use online platform powered by Currency Cloud.

If you are an exporter or plan to start your international business, get in touch now with Universal Partners FX to find out how much you can save in your international money transfers.

 

Sending money overseas has never been this easy. With banks striving to keep up-to-date as the financial markets change rapidly, currency brokers and money transfer companies dominate the industry. If you want to send money overseas, then look no further than expert currency transfer and foreign exchange broker Universal Partners FX.  UPFX has streamlined international payments and has made it so much easier for everyone to send money overseas. Currency brokers, for example, do not charge any fees when transferring your funds and they also provide a much better exchange rate than your bank.  So how does money transfer work?

How to start

First, you will need to open an account with an international money transfer firm and once you do so they will get in touch to discuss the transfer, walk you through the process, explain the exchange rates and any other necessary information you’ll need to approve before proceeding. You will then be able to book the transaction, providing details of the recipient’s account and pay the agreed amount, via an electronic transfer from your UK bank account.

When to expect the money to arrive?

The process is simple and straightforward and should not take longer than two working days. Some transfers depending on the currency and exchange rates can be executed instantly within seconds. It is common that major currency pairs or strong currencies will be transferred faster than weaker ones.  

Transferring money overseas

One of the safest, most secure and fastest ways to transfer your money internationally is by using an international money transfer firm. UPFX has consistently executed trades by offering competitive rates to all clients with low fees. Online money transfers are the most popular method for transferring funds overseas.

Exchange Rate: What is it?

An exchange rate tells you how much one currency is worth in relation to another currency. The general rule is that the higher the exchange rate, the more money you will receive when you trade. The exchange rate is not something stable and changes all the time depending on market news, the political situation in that country’s currency and other events that could cause volatility in the foreign exchange market. The foreign exchange market or, simply, forex, is considered the most liquid financial market and is very volatile. Because trillions of dollars are being exchanged, it is easy to buy and sell currencies. In 2019, the daily volume of the forex market reached $6.6 trillion! So, this is why the market is big, competitive and why many people decide to trade as a hobby with the potential to make a profit. While it provides plenty of trading opportunities, the forex market is also risky, that is why registering with a leading money transfer firm such as UPFX will save you time, money and lots of stress. If your business for example has regular transfers or requires a more nuanced currency strategy and risk management, then UPFX will provide you with a plan and a solution to suit your specific requirements.

Trading internationally? Save money with Universal Partners FX

If you are making international money transfers, you will need a cost-effective and secure way to do so. Universal Partners FX is the right partner for your foreign exchange. With UPFX, you can open a multi-currency account, send and receive money worldwide with low and transparent fees. You can also manage your money and send international payments 24/7 through UPFX’s easy-to-use online platform powered by Currency Cloud.

If you are an exporter or plan to start your international business, get in touch now with Universal Partners FX to find out how much you can save in your international money transfers.

 

If you need to transfer money to your own overseas account or to other businesses and employees abroad, you can find an online specialist currency transfer firm such as Universal Partners FX who will offer competitive exchange rates and cost-effective transfers. In a volatile and fast-moving market, it is best to choose a reliable currency transfer company who can keep up and provide consistency and security.

How to determine your currency transfer firm is reliable and reputable?

First, it is good to check whether your currency transfer provider is authorised and regulated by a recognised authority or regulator. In the UK, the specific legal body and authority of overseeing the financial services sector is the Financial Conduct Authority (FCA). A currency transfer company, for example, is obligated to make sure that their client funds are secure at all times, and it does so by keeping them separately from the firm’s own funds.

The FCA regulates the conduct of around 51,000 businesses. They are the prudential supervisor for 49,000 firms and sets the standards for around 18,000 firms. Established on 1 April 2013, the FCA took over responsibility for conduct and prudential regulation from the Financial Services Authority.

The FCA’s responsibility is to protect consumers such as yourself, as well as safeguard the integrity of the UK financial system. As an independent public body funded by the firms they regulate, they are accountable to the Treasury and to Parliament.

Avoid using your Bank

Don’t rely on your bank. From high costs and fees and high margins on exchange rates, your bank is not the ideal partner when sending funds. Instead find a reputable money transfer provider, like UPFX who can offer tailored assistance, competitive exchange rates and secure and fast delivery of your funds.

Monitor the markets

If you are sending funds regularly then you need to check what is happening in the financial markets and how the currencies you are exchanging could be affected by economic news and events. As a business, you want to make sure that you are not losing money when transferring your funds overseas, especially if you send big amounts of money to pay partners or employees overseas. To make sure you know which time is the best to transfer your funds, check an economic calendar or ask your currency transfer specialist. UPFX has a dedicated team to help you with any enquiry and publishes expert market insight on its website. Currency volatility is usually common before or after major Central Bank announcements or the release of important economic data such as inflation data, PMIs and employment figures.

Manage your risk

Again, your currency specialist can explain to you about the various risk management tools available to you and which ones you can use for your specific needs. A forward contract, for example, gives you the opportunity to secure today’s rate for a future transfer, so you can control what exchange rate you will get and how much it will cost you to transfer your funds.

Trading internationally? Save money with Universal Partners FX

If you are intending to start an international business or you are already dealing with international money transfers, you will need a cost-effective way to manage your overseas currency transfers. Universal Partners FX is the right partner for your foreign exchange. With UPFX, you can open a multi-currency account, send and receive money worldwide with low and transparent fees. You can also manage your money and send international payments 24/7 through UPFX’s easy-to-use online platform powered by Currency Cloud.

If you are an exporter or plan to start your international business, get in touch now with Universal Partners FX to find out how much you can save in your international money transfers.

International currency transfers can be easy and stress-free if your business has a plan and partners with a currency specialist right from the beginning. Whether you are a small business owner or a large business, if international currency transfers are an essential part of your operations, then a currency specialist will prove to be a valuable asset. From securing competitive exchange rates and providing risk management, a currency transfer firm such as Universal Partners FX will provide much-needed support and guidance.

Get more for your hard-earned money

One of the easiest ways to give your business a boost is by taking advantage of competitive exchange rates and securing the best possible return for your international currency transfers. If you plan ahead and lock a desired exchange rate for a future transfer or benefit from a current exchange rate, you will be able to save money and invest your funds in other assets or in developing your business further. This is the case when you send large amounts of money regularly overseas.

UPFX can help you access the best possible exchange rates available with no hidden fees or extra costs.

Know the markets

The markets are constantly changing and for this reason you want a stable and reliable currency transfer company to act efficiently and provide the best exchange rates, as these can change drastically from one moment to the next and from one day to another. One of the valuable and beneficial services UPFX provides, is its news articles on currency movements and how economic data may affect the pound or other major currencies. These regular updates are useful as they can provide a good picture of how the markets are and what could potentially influence them.

Online platform

With UPFX’s online platform, you can trade from anywhere and at any time, through your computer or mobile device. Currency transfers have never been this easy. In a fast world, where convenience is paramount, we have tried to cater to all our customers and provide services that make a difference and save you time and money. If you are regularly transferring funds for your business this is a perfect way to do so.

Security of funds

When we transfer your funds, we pay the utmost attention and provide fast and secure transfers. As a regulated firm we adhere to specific rules and regulations. We always protect your funds by operating segregated accounts.

Dedicated team of experts

We are always on hand to offer help and guide your through the process of transferring your funds. If you’re not sure about how to tackle your business’ payments, our currency experts will discuss with you and review your business’ needs and requirements, explain which currency transfer options would best suit your company and deliver tailored solutions and payment plans. They can also help identify areas where you could streamline processes and manage risks more efficiently.

Trading internationally? Save money with Universal Partners FX

If you are making international money transfers, you will need a cost-effective and secure way to do so. Universal Partners FX is the right partner for your foreign exchange. With UPFX, you can open a multi-currency account, send and receive money worldwide with low and transparent fees. You can also manage your money and send international payments 24/7 through UPFX’s easy-to-use online platform powered by Currency Cloud.

If you are an exporter or plan to start your international business, get in touch now with Universal Partners FX to find out how much you can save in your international money transfers.

As a business transferring funds abroad, you might have heard of currency hedging, or you might have even used it without realising it. If your business makes regular transfers overseas, hedging your risk is paramount. No matter what currency pair you need to trade in, exchange rates will potentially impact your bottom line. This is why, using hedging as a strategy to reduce risk is important, even when you might not benefit from it. The way to see hedging is as an insurance measure: if something goes really bad, then you will definitely protect your funds and your business.

Currency hedging

Put simply, hedging refers to currency strategies and ways to protect your funds from future currency movements. It involves entering a financial contract to limit the impact of foreign exchange risk on your international money transfers. Currency hedging is used by financial investors and businesses to reduce currency risks when conducting business internationally.

If you have an international business and want to safeguard your funds, then currency hedging is essential. In currency hedging, you can choose the type of contract that suits your needs and requirements so that you protect yourself from losing out if there are unexpected changes in currencies that will affect you. For example, businesses commonly use a Forward Contract, which locks in an exchange rate for a predetermined amount that can be used in the future, usually up to 12 months. Businesses very often have specific currency transactions they want to perform at a specified time and set intervals. By purchasing and booking a type of contract that will achieve their set goals and protect from unnecessary risks, they manage to reduce to a great extent their exposure to currency movements that might hurt their funds.  

While hedging can be complicated as there are various mechanisms to choose from when considering a hedging strategy, usually it is wise to understand and analyse potential foreign exposure and proceed to evaluate the relevant goals and actions needed to mitigate against that risk.

Why your business needs it?

Hedging is best suited to a business that deals with regular international payments and buys goods or services on an ongoing basis. If your business does not have such requirements and instead you want to send funds internationally whenever it is needed, then it will be more beneficial to have the freedom to take advantage of currency volatility and send your funds whenever the opportunity arises. If you commit yourself to a forward contract, then you might be missing beneficial market movements. So, currency hedging is ideal for businesses that depend on regular currency transfers and thus need to protect their liquidity.

If you are considering hedging, it is best to make sure that all goods or services’ orders are final and are going to be delivered, so you can confidently proceed to hedge based on those numbers. Unless you are sure, it is best to avoid committing to a contract based on estimates and uncertainty as this could leave you with a loss if your contract fails to go ahead. At the same time, you will also need to be aware, that even if you have taken the necessary measures and chosen to use a Forward Contract, it is possible that market volatility does not go against you, but since you have committed to the contract you need to remain faithful to it and complete it. For this reason, you have the choice to take advantage of both future and spot contracts and create a combination of hedging where you can still reduce the risk of any unexpected movements.

Currency hedging is also important when your business deals with countries where political or other events might amplify currency volatility. If you are trading with a currency that could be subject to extreme swings, then you need to make sure you are protected.

Managing currency risk is a specialised area. Universal Partners FX can help you develop the right hedging strategy and stay protected ahead of volatility.

Trading internationally? Save money with Universal Partners FX

If you are making international money transfers, you will need a cost-effective and secure way to do so. Universal Partners FX is the right partner for your foreign exchange. With UPFX, you can open a multi-currency account, send and receive money worldwide with low and transparent fees. You can also manage your money and send international payments 24/7 through UPFX’s easy-to-use online platform powered by Currency Cloud.

If you are an exporter or plan to start your international business, get in touch now with Universal Partners FX to find out how much you can save in your international money transfers.

One of the key challenges that international businesses face is foreign exchange. When businesses transfer funds from one country to another, they have to deal with currency fluctuations and transfer fees. Here are a few things to have in mind when transferring funds overseas.

Foreign exchange challenges

Very often, businesses sending funds abroad are subject to unexpected currency movements in the values of currencies, which can have a significant impact on their funds. If the market moves against you, your funds by the time they are exchanged into the new currency, might worth less. Or vice versa. If the market moves to your favour, your funds might worth much more. But such movements are unpredictable and currency risks can be mitigated with the help of a currency exchange specialist as Universal Partners FX who can suggest ways to move you funds in the best possible way, securing your transfers and offering valuable support.

Too complex? What contract should you choose?

Choosing the right contract can be daunting and the complicated terminology can be discouraging. A spot contract refers to the exchange of currencies at the current (or “spot”) market rate and the two parties agree to exchange their currencies at a predetermined date. Another type of forex contract is called a forex forward contract. In a forward contract, two parties agree to change the currency at a predetermined date and exchange rate. Similar to forward contracts, forex futures contracts are managed on an exchange. Futures contracts and forward contracts are very safe and can be used to hedge against risk. Your dedicated currency specialist can walk you through your various options and help you choose what is best for your business and specific situation. But whether you choose between forwards, futures, or spots, it is important to understand the way the forex market works and gain a competitive edge in forex that can save you a lot of money.

What is Forex?

Forex, or foreign exchange, is the single largest and most liquid market in the world, with over $6 trillion changing hands every day as foreign exchange is essential to both businesses and individuals. From changing money when visiting another country, to banks trading funds with their customers and other banks, forex transactions are a regular and everyday operation. Forex traders or speculators also trade forex for profit and can do so as part of their profession or as a hobby. Whether professionals or beginners, forex traders earn a profit by buying one form of currency when it is priced low, and then selling it when it rises so they can potentially make a profit. International businesses also exchange money when paying their international suppliers.

Why Currencies Fluctuate?

Several factors affect the value of currencies. Money supply by changing interbank borrowing rates or printing more money can affect the value of a currency. Central banks’ decisions, policies and how much money is available in the market can have an important impact on the value of a currency too. The laws of supply and demand can also change the value a currency, since if a currency is appealing, traders would want to buy it, but if no one needs it, it will decrease in value.

Transferring funds?

If your business is making an international bank transfer, it is good to seriously consider a currency exchange company such as Universal Partners FX. Currency transfers with UPFX are usually faster, cheaper and equally secure than any bank. You can easily send funds abroad without any hassle and without too many intermediaries.

If you’re  transferring funds from or to a foreign bank account, our dedicated customer support team or your personal account manager will explain everything you need to know about making a transfer effectively. You can also use our simple and user-friendly online platform to transfer your funds in a fast, secure and affordable way. Get in touch now with Universal Partners FX and find out how you can make the most of your hard-earned money.

If you are a business that has international suppliers, clients or employees, you will know that you will need to exchange your national currency for another one in order to make payments or convert income. These exchanges take place in the foreign exchange market.

The foreign exchange market, or Forex market, is widely considered to be one of the most liquid markets in the world, with more than $6 trillion being traded every day. Also known as the FX market, it is made up of a vast network of banks, commercial companies, investment firms, hedge funds, as well as retail investors and forex brokers. It is a global marketplace where people and institutions exchange one currency against another. The foreign exchange market is not controlled by a central bank or regulatory institution.

Understanding what forex is and how it works is essential when transferring funds overseas and especially if you are a professional trader trading in forex.

What does it mean exchanging or converting currencies?

When we talk about exchanging or converting currencies, we refer to the exchange rate, which is the price of one currency in relation to another one. It is the relative price of the specific two currencies or currency pair. A foreign exchange rate can be expressed as the number of units of the home or domestic currency per unit of the foreign currency. FX rates can also be quoted indirectly. If, for example, the exchange rate between the US dollar and the euro was on 20 July 2020 in Germany €0.900 and $1.110, then the first is a direct quotation and the second one an indirect one. This is because the first one is from the point of view of the domestic country of the euro.

Banks, foreign exchange companies, and international financial institutions provide forex services in exchange for a fee.

Foreign Currencies

There are more than 170 currencies around the world, but everyone knows that the most popular currency that dominates the markets is the US Dollar or USD. The EUR or euro is also a well-known and widely used major currency accepted in 19 countries of the European Union. The GBP, Sterling or British pound, the JPY or Japanese yen (JPY), the Australian dollar (AUD) or Aussie, the Canadian dollar (CAD) or Loonie are also important currencies that are exchange regularly and traded in the forex market. What are known as majors, are the below currency pairs which account for around 75% of forex trading: EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CAD, USD/CHF and NZD/USD.

Transferring funds?

If you are making an international bank transfer, it is good to seriously consider a currency exchange company such as Universal Partners FX. Currency transfers with UPFX are usually faster, cheaper and equally secure than any bank. You can easily send funds abroad without any hassle and without too many intermediaries.

If you’re thinking of repatriating your salary, buying or selling your overseas property, making an investment, or transferring funds from or to a foreign bank account, our dedicated customer support team or your personal account manager will explain everything you need to know about making a transfer effectively. You can also use our simple and user-friendly online platform to transfer your funds in a fast, secure and affordable way. Get in touch now with Universal Partners FX and find out how you can make the most of your hard-earned money.

If you are a business that needs to pay your employees and suppliers abroad or convert income from overseas, you must have used the services of a bank or a currency specialist to do so. Using a currency specialist such as Universal Partners FX comes with certain benefits that your everyday banking institution cannot possibly deliver. From saving you money in unnecessary fees as well as securing a competitive exchange rate, UPFX’s dedicated team can relieve you of the burden of worrying about the exchange rate eating into your finances. A currency specialist will always provide a more thorough service than any bank can, and the overall winner is the client - getting better rates and more in depth insights.

If you want to make the right decisions and get the very best value when operating in the currency market, here are a few tips to consider.

Plan Ahead

Many businesses make the mistake of dealing with their foreign payments on a day-by-day basis. This opens you up to a huge amount of currency risk as the rate can fluctuate wildly from one to day to the next. At Universal Partners FX, we always help clients plan ahead by assessing their currency risk for the next 12 or even 24 months against the current rates. A strategy like this devised by an expert who will monitor the market can start saving thousands after just a few months.

Ignore Rates (at least initially)

This might sound illogical, but rates are not the most important thing when devising a strategy for your business to get the best value on foreign exchange. Choosing a provider based on their lower rates may yield dividends initially, but what happens when rates move? Like anything, price doesn't tell the whole story. Look out for the array of services that enable you to be flexible when the inevitable movements occur in the market. A spot contract can help you secure an excellent exchange rate at the moment you want to make an instant transfer, but you can budget effectively and protect your business from unexpected market volatility by fixing an exchange rate in advance with a forward contract. UPFX also offers stop loss and limit orders when you want to target a specific exchange rate. A limit order enables you to make a transfer at your desired and predetermined rate when the market reaches that level. A stop loss order is also perfect when you want to protect your funds against an unexpected currency drop by setting a predetermined worst-case rate. These are off-the-shelf products, but every business is different so we always tailor our strategies to suit the needs of each client individually.

Define Your Risk Appetite

As well as limiting risk, our services can also do much more than that. For businesses that have a higher risk appetite, our currency hedging solutions can enable businesses to profit from positive market fluctuations. Of course, this comes at a risk - but if you are in a saturated market where competitive advantage is everything, these strategies can not only protect your business, but also provide extra value that you can pass on to your customers. So before you embark on any strategy, it is important for you or your foreign payment provider to consider what risk level is appropriate for your business to cope with. 

 

If your business requires currency services to boost your bottom-line profits, UPFX’s dedicated customer support team or your personal account manager will explain everything you need to know about making foreign transfers effectively. You can also use our simple and user-friendly online platform to transfer your funds in a fast, secure and affordable way. Get in touch now with Universal Partners FX and find out how you can get the best possible value from the currency market.

 

Sustainability is a hot topic in the finance world, starting several years ago when many of the larger banks were pressured to move away from oil and gas and move towards the low-carbon economy. Having now seen the positive environmental impact that came from enforced COVID-19 lockdowns, there is now a call for sustainability to be a key component of the economic recovery. Transferring billions internationally on behalf of our clients, we have noticed a shift in where this money is going and what it is facilitating to suggest that a greener economy is achievable. As always, exchange rates can play a pivotal role in the growth of new industries that rely on international investment or global supply networks,

Solar Energy

Prior to 2008, solar cells and panels were mostly sourced from Europe, but since the market became more saturated the majority are now imported from China, Malaysia and Taiwan. These countries have notable world-leading solar farm projects, but a lot of the new projects are taking place in developing countries in Asia, South America and Africa.

As well as importing the technology and components, developing countries also rely on overseas investment from larger economies like the US to kick start projects. However, the risk associated to a certain currency may affect the confidence of the investor, therefore currency hedging becomes a crucial factor in the planning stage to ensure the investor is protected. In 2013, the sharp decline of the Indian Rupee meant that US investors lost significant profits on renewable energy projects.

Since 2016, we have seen a growing number of new clients being involved in renewable energy projects around the world, not to mention the emergence of flat-pack homes which are designed with solar panels. It was even suggested recently that flat-pack homes could be the answer to the affordable housing shortage in the UK. With developments like these we expect to see a continuation of the trend In the last 4 years, where the percentage of total FX volume attributed to renewable energy and sustainability projects has risen five fold, resulting in FX volume of over £137 million.

The Lithium Age

At the start of 2019 the growth of Electric Vehicles (EV) was highly anticipated. New climate agreements and legislation seemingly pointed towards the EV revolution. As the batteries in electric vehicles rely on lithium, this led to a surge in production ready for sales of EV to kick-off and even had some people asking 'Is lithium the new gold?' However, it didn't quite materialise as the slow-down of the EV market led to over-production and depreciation. Now, midway through 2020 it seems that lithium could be back in the spotlight.

Chile and Argentina - with their salt plane brine deposits - are two of the biggest Lithium producers in the world, alongside Australia and of course China, who rely heavily on Lithium for their vast electronics manufacturing operations. Since the start of the year we have taken on a number of clients who are directly or indirectly involved in importing lithium to the UK or producing the batteries for EV. We have seen over £20 million this year already, which is more than the whole of 2019.

UPFX and our pride in sustainability

With a passion for what we do, we not only want to help our clients but we also want to leave a positive impact on the world in general. With some of the largest banks starting to take a lead on sustainability, we also want to do our bit to ensure that the transition to a greener economy can continue apace. Along with thorough money laundering checks, our team also like to know that the transfer meets our sustainability requirements.

To get live exchange rates for your international transfer click here

 

Incoterms is an abbreviation for International Commercial Terms, which are a set of predefined commercial terms drafted by the International Chambers of Commerce (ICC). First published in 1936, Incoterms rules provide internationally accepted definitions and rules of interpretation for most common commercial terms.

Incoterms are primarily a set of three-letter codes which define trade terms related to responsibilities of businesses involved in a shipping or sale relationship. Simply put, they exist as a guide to ‘who does what’ in a variety of scenarios such as in the case of fright and insurance under the terms of a shipping contract. They aim to help traders avoid costly misunderstandings by identifying the tasks, costs and risks involved with the delivery of goods from sellers to buyers. Incoterms are recognised by UNCITRAL as the global standard for the interpretation of the most common terms in foreign trade.

A full list of Incoterms can be found here.

Why use Incoterms in international trade?

Despite other clauses for global trade existing around the world, Incoterms are global in their reach. They do not include trade terms codified for national purposes such as the ‘less than truckload shipping’ (LTL) rule used within the United States. Instead, Incoterms are universal, providing clarity and predictability to businesses all across the world.

When a business decides to enter international trade, whether that is selling a product oversees or importing finished goods and raw materials, it will be faced with a number of barriers. The logistics of physically moving goods can sometimes call into question the decisions that have made to operate in overseas markets that have been made at board level. Once a trade has been agreed, the responsibilities and roles of the various parties must be agreed upon and clear to all.

The majority of the work falls to the exporter, as they must produce the goods to be shipped, deal with a freight forwarder, assign a shipment date and vessel with the customer and comply with the terms of both the sales and shipping contract. The importer will have to apply for a letter of credit from their bank, transfer the terms of the contract onto his application, get in touch with a native freight forwarder preferably in the port where the goods have been agreed to arrive and possibly arrange insurance if not set out in the terms of the shipping contract.

 

Types of Incoterms

 

The above shows the full list of Incoterms and the transfer of risk, as of January 2020. The three most popular Incoterms are; CIF (Cost Insurance and Freight) Incoterms, FOB (Free on Board) Incoterms and CFR (Cost and Freight) Incoterms.

  • CIF Incoterms – This is a wide-ranging package where the seller in solely responsible for the foods until they arrive at the destination port.
  • FOB Incoterms – These terms set out that the exporter pays all costs up the and including the loading of goods onto the vessel for shipment. The buyer is then responsible for the cost of shipment, insurance and all costs in the country where the shipment is being sent.
  • CFR Incoterms – If this Incoterm is used in the sales contract, the seller is responsible for paying all carriage costs up to and including arrival at the port of import. Importantly, the buyer remains in charge for the insurance of all goods.

For businesses that work and deal with international imports and exports, Incoterms are just one of the factors that need to be considered when completing deal. Another important factor to take into consideration are exchange rates. Here at Universal Partners FX, our team of financial specialists help to make your international transfers to pay for all export and import costs as smooth as possible at the best possible rates. We specialise in a range of foreign exchange services including imports and exports and freight and logistics. You can learn more about we can help below.

Importers & Exporters >                 Freight & Logistics >

For more information on how Universal Partners FX can help with your international currency transfers, do not hesitate to get in touch with a member of our team today.