top of page
Search

Moving Money Internationally

Writer's picture: Lindsay PowellLindsay Powell

Updated: Nov 1, 2022

Bottom line, the purpose of a company is to make a profit. A firm selling goods and services in the domestic market can easily move money around to pay suppliers, payroll, taxes, and investors at home. A company that sells overseas, however, will have cash in bank accounts in different countries and in different currencies. It turns out that it is not easy to repatriate the money. My customer journey is instructive.


With the dollar appreciating on the currency markets, I recently decided to pay off a large

business loan in the UK. My money was in US dollars, and the loan was in UK pounds sterling.


My cash was in two CDs maturing in April 2023. It took a week to get the funds into my

checking account. Closing a term savings account ahead of its maturity date is subject to

early withdrawal penalties, which means calling the bank to authorize the transaction. Four hours on the phone finally sorted out the delay at one bank. The other institution did not execute my instructions on time, which took multiple calls and lost me a week. Frustratingly, calls were repeatedly dropped as I was put on hold. During that period the pound went from $1.03 to $1.10, which was an expensive delay. (It was $1.37 on average in 2021). I have filed a complaint with that bank.

As the funds arrived in my checking account, now the challenge was to convert the money into pounds and move them to the UK. I used one of the largest online foreign exchange companies. Normally it is quick and easy and can be done on a mobile ‘phone. But because the amount of money involved was over set limits, I had to go through the main desk, which means the money goes through a New York bank to comply with Federal money laundering laws. By law, US banks must report all cash transactions exceeding $10,000 — the international money transfer reporting limit being set by the IRS. There is also a limit of $300,000 in a 30-day period. I dollar-cost averaged the transactions while sterling now bounced around in the range of $1.11 to $1.14 – a significant difference over the previous week. Each time I wired money to the foreign exchange bank it cost me $30; the trade did not cost me a fee.


Most of the trades were executed, and the money appeared in my UK bank account, within 24 hours. Inexplicably, the last trade took five days, two of which were the weekend, only adding to the stress of this now protracted process.


Next challenge: pay the lender. Owing to the sum involved, a normal Banker's; Automated

Clearing System (BACS) transfer was not an option; this system is equivalent to the Automated Clearing House Network (ACH) in the USA. I had to use the Clearing House Automated Payment System (CHAPS) of the Bank of England, an electronic bank-to-bank technology that enables same-day payments to be made within the UK for £30. That, surprise-surprise, was not an option with my particular High Street bank; it is a service only offered by its commercial operation. I was informed during an international phone call from Austin, Texas that I would have to walk into a branch to complete – the nearest being some 4,500 miles away.


The options offered by the bank with whom I had the loan were many and customer-friendly.

They would even accept a personal check [UK: cheque]! FedEx delivered my check today (a day late!) to the administrative centre in Northampton for $91.50. All being well, the check will be processed by my High Street bank and I will be free of the loan and its recurring interest payments. But that time in transit was still three days of interest payments and the others it will take to clear the check, whereas paying through CHAPS would have been the same day.


The point of telling this story is this: moving money internationally takes time and costs money, which eats into profits. The vagueries of international exchange markets are just one part of the challenge. You must understand the rules governing money transfers in each market you operate in. You also need to build relations with banks and financial institutions to ensure your cash moves seamlessly – and legally – to your account of choice. It may take longer than you think. And Time, as the saying goes, is money, whether it’s dollars or pounds.


-Lindsay Powell

31 views0 comments

Recent Posts

See All

Comments


bottom of page