How Sports Organizations Save on Foreign Exchange Payments
Sports organizations that travel internationally have to manage a myriad of details, as each new country presents different customs, languages, and currencies. One of the primary issues is how to manage currency and payments related to the team’s foreign competition and activities.
Naturally, many businesses will only accept payments in their country’s own currency, so foreign exchange payments have to be arranged by the sports team. However, there is a cost to making foreign currency payments that can vary widely depending on the method used.
What Are Foreign Exchange Payments?
All global currencies trade in the Forex (FX) spot market, where exchange rates between any two currencies will fluctuate daily. Foreign exchange payments occur when a business must pay another party in a foreign currency, using the current exchange rate. For example, a European team traveling to Japan would need to exchange Euros to Yen for most payments.
Because this is a cross-border transaction, there is a need to convert one currency into another via the foreign exchange market. The challenge is that exchange rates between currencies change frequently and are difficult to predict, which can affect the overall cost of foreign currency payments. The result is that a sports team making either one-time or regular currency payments incur a greater expense than anticipated.
How Do Foreign Exchange Payments Impact Sports Organizations?
Sports organizations that compete internationally frequently make foreign exchange payments a necessary part of their business. These payments may include player contracts and salaries where they reside in another country, or payments related to team events, shipping equipment, and travel. All of these parties expect to be paid an agreed amount in their own currency, which presents a challenge with the constantly shifting FX markets.
Without some means of managing the volatility and complexity of foreign exchange payments, a sports organization can bear significant additional costs from cross-border payments. There is also the potential for delays within the banking system, adding another layer of uncertainty to the transaction.
How to Save on Foreign Exchange Payments
Despite the hurdles presented by foreign exchange there are ways for a sports club to save on these payments. In most cases, it will mean engaging a foreign exchange partner who is prepared to assist in several key areas to reduce costs. A partner’s services should include all of the following:
Lowest Foreign Exchange Rates
The most important element is to secure the lowest exchange rate for payments, now and in the future. This will entail offering the best spot exchange rates possible, as well as the ability to place a currency market order for optimum entry and maximum savings.
Fee-Free International Transactions
Fees for international currency transfers can be a major cost in foreign exchange, an area where traditional banks or payment rails make large profits. Even if there is a low fee, that can be offset by the payment being pegged to an unfavorable rate, or with an added margin cost. An exchange partner should offer fee-free transactions for most payments, at the best available rate.
Ease of Recurring Foreign Payments
It is usual for a sports team to make regular payments to the same business using foreign exchange, and those relationships can span many years. In those instances, a reliable exchange partner can ensure that recurring payments are timely and accurate, in any foreign currency. This solidifies critical business support while abroad and eliminates any problems with payment amounts and fluctuating exchange rates.
Borrow Foreign Currency
A foreign exchange partner for a sports team should have a feature to borrow foreign currencies for payments, rather than having to buy the currency in the spot market. The organization can set up a credit account with the exchange partner and borrow as needed in most global currencies, at a low cost, and with immediate availability. This is an advantage over buying currency directly from traditional banks, improving cash flow and transaction flexibility.
Hedge and Risk Management Specialists
Foreign exchange specialists will have FX risk management strategies in place for their customers, with the ability to hedge against currency volatility. This may involve using market volatility simulation models to anticipate exchange rate changes, as well as hedge-related financial tools.
Save Time and Money With a Sports FX Partner
Premier Sports Network partners with a leading foreign exchange bank that has deep experience assisting sports teams with their FX needs. Our partner engages with sports organizations to support all aspects of foreign exchange payments and transactions. With the goal of complete transparency and cost savings, our sports FX partner minimizes the risk of currency volatility and positions your team for secure, timely international transactions.
Contact us to learn more about how Premier Sports Network can assist you with foreign exchange payments and risk management.
