Paying UK suppliers by credit card

ugg

Hello there,

One of my UK suppliers has asked if I want my customer account set up in stg or euro. I feel stg would be best, but I want to make sure it's the best option (or if it makes any difference at all).
Any advice would be welcome.

ghosttown

If you're paying by CC it will make no difference, it will be valued as per your bill. However the invoice to you will be STG. If you're in Euro, keep it in Euro, an accountant may advise better, but i've seen horrible x-rate adjustments in year end accounts that distort the picture because people left stg transactions in the accounts.
So, my recommendation is stick to Euro.

TheCostumeShop.ie: Ronan

I'd suggest the opposite, go with Sterling if possible. UK suppliers will often hedge the FX risk by running a massive difference between the Euro and Sterling prices.

Ask them for a current Euro and Sterling price list and go on to XE.com and compare them. If all are the same then go with euro for accounting ease but I've seen as much as a 46% price difference from some suppliers in a paddy tax.

Check with your card provider if they are going to charge additional fees for currency exchanges (around 1.5%), It's minor but keep it in mind.

Atlas_IRL

Can you buy the good in STG? If so do as there can be huge differences in the price of some goods. A department store down the road from us gets one of our goods for about 50 euro cheaper cuase they can buy them in the UK and pay Sterling, its sick.

ugg

Thanks everyone for the advice.

It obviously does make a difference whether I opt for stg or euro (I can buy in either). I wonder whether proof of the stg value on the day of the transaction could be used to avoid being hammered in the end-of-year accounts. It's a great idea to ask for the both pricelists and check them on XE so I'll do that.

TheCostumeShop.ie: Ronan

Well thats the best way to get the sterling value, in this case enter it in your books as the Euro Value that appears on the credit card statement.

dz

EURO. You have been given the wrong advice here! Why would you set up an account in GBP? Shift the exchange rate risk to them and run your account in Euro!

Axwell

Besides the fact the thread is two months old and im sure the OP made the decision long ago, did you even read the advice of the other poeple. They suggested that Ugg go with stg because on a price list in both there could be a huge difference in the stg price and the euro price. Seems like pretty good advice to me!

MOH

Since the threads been bumped already:

If you're making irregular payments to suppliers in the UK and US (roughly 3-7K every 2-3 months, maybe becoming monthly later on), what's the best way to go about it?

Options seems to be:
- bank transfer from Euro account, means you pay exchange fees each time
- set up $ and £ accounts to transfer from, allows you to protect yourself a bit from currency fluctuation, but not sure what the fees on maintaining these accounts are like
- business credit card, not sure if it's like a personal card where you can reduce the transaction fees by keeping pre-loading it in credit, but then you don't know at the time of the transacition exactly what the exchange rate is going be.

Thoughts/experiences?

probe

MOH wrote: »

Since the threads been bumped already:

If you're making irregular payments to suppliers in the UK and US (roughly 3-7K every 2-3 months, maybe becoming monthly later on), what's the best way to go about it?

Options seems to be:
- bank transfer from Euro account, means you pay exchange fees each time
- set up $ and £ accounts to transfer from, allows you to protect yourself a bit from currency fluctuation, but not sure what the fees on maintaining these accounts are like
- business credit card, not sure if it's like a personal card where you can reduce the transaction fees by keeping pre-loading it in credit, but then you don't know at the time of the transacition exactly what the exchange rate is going be.

Thoughts/experiences?

If you have USD/GBP revenues coming in as well as expenses, you might consider opening bank accounts in the relevant currencies. This eliminates the loss on conversion and should leave you with low transaction charges.

If all your revenues are in EUR, I can't see any point in having GBP/USD accounts - unless perhaps you have lots of tiny payments in those currencies.

Otherwise if your suppliers accept Visa/MC cards, you might use that option. Make sure they charge you in their currency - not EUR. If they charge you in EUR, they use their own exchange rate - which could be anything. (This also applies to the root poster).

You might want to shop around between banks for the best card. While using a card within the Eurozone does not incur "commission" charges, it does in USD/GBP land - you need a card with the lowest FX commission charge.

You should also ask your supplier if they offer a billing and payment option in Euros to an account with an IBAN. If they do lots of business in the Eurozone they should offer this option. Payments in EUR to IBAN EUR accounts are subject to normal bank charges. The arrangement would be more efficient for the overall relationship because they could pay for their expenses in EUR without conversion costs and repatriate the balance to their home currency in a single transaction - getting best FX rates and minimising transaction fees.

MOH

probe wrote: »

If you have USD/GBP revenues coming in as well as expenses, you might consider opening bank accounts in the relevant currencies. This eliminates the loss on conversion and should leave you with low transaction charges.

If all your revenues are in EUR, I can't see any point in having GBP/USD accounts - unless perhaps you have lots of tiny payments in those currencies.

Otherwise if your suppliers accept Visa/MC cards, you might use that option. Make sure they charge you in their currency - not EUR. If they charge you in EUR, they use their own exchange rate - which could be anything. (This also applies to the root poster).

You might want to shop around between banks for the best card. While using a card within the Eurozone does not incur "commission" charges, it does in USD/GBP land - you need a card with the lowest FX commission charge.

You should also ask your supplier if they offer a billing and payment option in Euros to an account with an IBAN. If they do lots of business in the Eurozone they should offer this option. Payments in EUR to IBAN EUR accounts are subject to normal bank charges. The arrangement would be more efficient for the overall relationship because they could pay for their expenses in EUR without conversion costs and repatriate the balance to their home currency in a single transaction - getting best FX rates and minimising transaction fees.

Thaks for all that.

Would be expecting all revenue in Euro only. The main point I saw in favour of currency accounts was that I could frontload them while exchange rates are good, giving me a cushion and extra time to look for alternative suppliers if rates get really bad.

On a cc, I'd definitely be making sure I got charged in their own currency. I've been caught before when a hotel booking crowd that was supposed to charge me at local rates put it through in Euro at an extortionate rate. Would still be left in doubt on the eact cost though - if it took them a few days to charge the payment, the Visa fx rates could change in the meantime.

Not sure how much Eurozone business they do, but I'll definitely follow up on the suggestion of paying into a euro account.

Thanks for the advice.