Repatriating overseas earnings

Repatriating Earnings:
Secure an Exchange Rate

Whether you are an individual who has been working overseas or you are a business located overseas, there is every chance that your earnings have been placed into a local bank account. This is common practice as it enables you to access the cash in the local currency but it also makes it easier to make and receive payments. However, if you are planning to move back to your own country, then you are going to need to repatriate your overseas earnings but what does that entail?

Repatriating overseas earnings

Types:
Forward Contract

There are different types of forward contracts available. The following contract types can be ideal for certain situations, but you should ensure you speak with a specialist, such as NewbridgeFX, who can explain what the best option is for your particular situation.

Repatriating Earnings from Overseas

The process of repatriating earnings is when you convert foreign currency into your local currency. This process is often necessary as a result of business transactions, foreign investments or even international travel. However, when this takes place there are many things to take into consideration such as tax, the foreign exchange rate and the current market situation at that moment in time. Of course, you are going to want to repatriate your overseas earnings at the right time and that could mean that you need to rely on professional advice or guidance. Whether it’s receiving rate alerts alerting you to a particular exchange rate or up-to-date market news, they can all help you to make the right decision at the right time.

Register an account
Repatriating overseas earnings
Repatriating overseas earnings

Case Study:
Forward Contract

Repatriation – Understanding What It’s About

When it comes to repatriation, from a corporate perspective, it could relate to the conversion of any capital that is held to the currency of the country that the business or individual resides or moves back to. 

There are now many businesses and individuals operating overseas. However, with that comes a potential need to repatriate money either as a one-off or on a regular basis. There are many complexities that surround this process as it can mean that businesses and individuals are susceptible to foreign exchange fluctuations, transfer fees, taxes etc, and they will need to ensure that the earnings are converted to the local currency at favourable exchange rates in a fast and efficient manner. Therefore, it is sometimes more beneficial to seek out professional advice to ensure this process is managed smoothly, as well as safely and securely.

The foreign exchange market can be very volatile, and the value of a particular currency can alter many times during the course of a day. Sometimes the market can move favourably, and other times it can move in the wrong direction, resulting in the value of the currency you hold being decreased. Despite this, you can utilise the expertise of foreign exchange specialists to help you identify the right time to move your money and minimise the risk of currency fluctuations. With economic events and government announcements having an influence on the exchange rate, should you be unaware of these economic releases the value to the amount you repatriate could be considerably impacted.

It is common for businesses, and Individuals, to operate in other countries. There are UK companies operating in foreign countries where they receive payment in that local currency but at some point, the earnings will need to return to the UK. So, when a company earns an income in a foreign currency, the earnings are susceptible to foreign exchange risk. Therefore, they have the potential to lose or gain value as a result of fluctuations in the value of both currencies. NewbridgeFX can help both businesses and individuals to repatriate overseas earnings by offering a fee free, fast, efficient and secure service. For further information on how NewbridgeFX can help please contact us

Products:
Manage Risk

NewbridgeFX offers a specialist service in the deliverable foreign exchange market, promoting a range of products and services, available online or over the phone. Our products have been designed to meet the needs of our clients. A lot of these products are ways for businesses, and individuals, to manage and mitigate currency risk, and are used frequently during times of increased volatility. Alongside up to date foreign exchange related market news, which works in tandem with our range of products. 

Spot Contract

Lock in an exchange rate for immediate onward settlement. Funds can be received the same day.

Forward Contract

Lock in an exchange rate today, but for settlement at a later date that suits you, up to 12 months in the future.

Market Order

We monitor the markets real time and take action to trade between currencies when your desired rate is achieved.

Rate Alerts

Set an alert for phone or email notification when an exchange rate has be achieved to take advantage at the best time.

FAQ:
Forward Contract

Answer

Once you register an account, you can ask for a forward contract to buy a specific amount of currency, at a specified date in the future. If you confirm you want to proceed the contract becomes an agreement between both parties, and the exchange rate is secure and locked in. You would need to transfer a deposit, held as a balance against the contract (5% of the value of the contract is common). When the settlement date (otherwise known as the maturity date) arrives, you transfer the remaining balance to our account. Once received we will transfer the agreed amount of currency to your nominated beneficiary account. The contract agreement is then finalised.

Answer

There are no costs, or transfer fees to secure a forward contract agreement. The buy and sell amounts would be secure and fixed for the duration of the contract.

Answer

Whether you are a business or individual, forward contracts enable you to secure an exchange rate today, for settlement at a future date. You also fix the buy and sell amounts so the cost doesn’t change regardless of exchange rate movements on the currency market. A forward contract agreement is also helpful from a cashflow perspective.

Answer

As a forward contract secures the exchange rate and fixes the buy and sell amounts, it does mean you cannot take advantage of the exchange rates if they continue to rise and become even more beneficial for you. A forward contract protects you if the rate declines, but you cannot benefit if the rate continues to improve and moves more in your favour. Forward contracts are an effective risk management strategy.

Answer

While forward contracts can protect against the exchange rates declining over time, you cannot take advantage if the exchange rates continue to rise. As a result, there are various hedging strategies to utilise, such as securing 50% of the total value as a forward contract, with the remaining value booked as a spot contract at a later date. You could also use Market Orders to secure the remaining 50% value should your desired exchange rate be obtainable in the future; but Market Orders will only execute should your desired rate be achievable in the market, and are not guaranteed. NewbridgeFX can help you set an appropriate risk management hedging strategy to help you achieve your objectives.

Answer

In simple terms, interest rate differentials between two currencies determine a forward contract exchange rate. They are not a forecast of where the exchange rates may be in the future. If you are selling a currency where the country has a lower interest rate, compared to the buy currency/country, then the forward rate will be higher than the current spot rate, and vice-versa.

Benefits:
NewbridgeFX

collection-accounts

Multi-Currency Account In Your Company Name

Receive funds from your customers in to your own named collection account, using one account number for all currencies, or a local in-country account number still in your company name.

multiple-beneficieries2

Create And Manage All Your Beneficiaries

Add and manage your beneficiaries, perform bank account validation & verification checks as you enter your beneficiary details & bulk upload multiple beneficiaries via a CSV file.

fast

Make Fast & Secure Payments To Over 200 Countries

Real time Swift and local payments are settled the same day, within minutes (currency/country dependant) and payment tracking capabilities allow you to keep updated on the payment status.

multi-currency

Multi-Currency Balances

Hold multiple currencies and access balance information in supported currencies. Receive, convert, send and move money between your multi-currency accounts without making payments.

convert

Convert Over 45 Currencies, 24/7, Using Multiple Devices

We provide informative, up to date market news, including updates on currency movements, upcoming economic events and announcements that can impact the foreign exchange market.

market-order-icon

Real-time Reporting And Tracking

View and track all conversions, payments and incoming funds using our online platform and receive email notifications when funds received, conversions processed and payments released.

NewbridgeFX