Sunday 14 April 2019

USA transaction fees

Some of our websites are hosted in the USA. The bills in $USD for this are charged to my business Visa Card. The bank converts this USD amount to pounds GBP.  For each transaction there's a foreign currency processing fee starting at 1 GBP and increasing with the value of the transaction. It is not listed as a separate bank fee in the bank statement so it is easy to overlook. This can represent up to 10% of some bills.

I've just been through our list of overseas suppliers and have changed the credit card on file to one of my Revolut Debit cards. There's no foreign currency transaction fee and it is at the Interbank Exchange rate.  Less money to the greedy banks.

Friday 12 April 2019

Calculating Foreign exchange costs on Credit Card expenses

We're just getting used to Xero accounting software at Oaksys Tech Ltd. We switched over from an ancient copy of Sage 50 in preparation for the new HMRC (UK tax) rules on electronic tax reporting. It was our accountant's suggestion and we cannot thank him enough, accounts are so much easier on Xero. As a consequence we are getting a much better understanding of our expenditure and income. One of the big bugbears is handling credit card bills for foreign exchange transactions and reconciling them against the original bills (in foreign currency). The conversion rates used by the banks never seem to match published Forex rates, and we have to add adjustments when reconciling the credit card statements against bills.

It has finally dawned on us that the reconciliation differences are bank fees for forex transactions  embedded in the the credit card statement lines. Dohh! Probably every accounts clerk knows this but we didn't.  So now we burrow into the detail of the "printed" credit card statement and record those fees as bank charge adjustments.  They are not split out automatically when Xero loads an electronic feed from the bank.

If we have been working overseas on a project, staying in hotels and travelling a lot, all the bank fees start to represent a significant cost. It either comes out of our profit or we pass it on to our clients.

We have found an alternative approach to this issue. It eliminates those unwanted bank charges. We use a debit card which does not charge fees for inter-currency transactions. Foreign exchange takes place at inter-bank rates. You can chose to pre-buy currency, or just use the rate at the time of transaction. The card is from    It works in a wide range of currencies and provides a feed to Xero.