Linda Monique

How to avoid foreign exchange rate fee shock

Almo Milk CEO Linda Monique on how we need to shop around on foreign exchange rates before travelling or doing business.

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When Linda Monique started her business, Almo Milk with the intent of shining the organic and sustainable spotlight on Australia’s almond industry, never did she expect to lose $30,000 in fees and variable exchange rates by trading her products internationally.

It’s a story of foreign exchange fee shock that many Australians can relate to.

For many of us, we notice this on our post-overseas holiday bank statements and are forced to just accept that it’s part of international travel.

But for Australian start-ups or small-to-medium sized companies, fee shock can break a business and stop them from expanding their reach.

“We moved over $250,000 in money from New Zealand doing business and we lost $30,000 in higher exchange rates offered by our bank,” says Linda.

“We launched Almo Milk in 2016 with manufacturing being offshored to New Zealand and from day one of our business we were moving money overseas.

“We were using an online banking portal and a small business specialist. Monitoring the small transaction fees and checking market exchange rates, we assumed the exchange rate we were receiving online was similar to the daily market rate.

“But two years into the business, we discovered we were losing a lot of money in the variation between foreign exchange transaction rates.”

Linda blames her own lack of time and trust in the banks for what she says is a disconnect between what they make visible on exchange rates and how they’re actually calculated compared to market rates.

“Our experience was disappointing because I assumed that the online banking system that I was using was giving me the best market rate and like many people I just lacked the time to spend analysing rates.

“The small business banking specialists we relied on never provided the transparency we needed on currency rates or eligibility to obtain better rates.”

Being ripped off on fees is the number one concern for small companies and medium enterprises (SMEs) when it comes to foreign exchange (FX) transfers (58.7%), according to the latest OFX Cross-Border Confidence Index released by ASX listed global money transfer specialist, OFX.

The OFX Cross-Border Confidence Index, which surveyed just over 1000 small-to-medium sized businesses, also found that medium-sized business owners cited market volatility (51.3%) as being just as much a concern as fees.

For SMEs who don’t trade internationally, the Index also found their biggest concerns were around compliance, regulation and red tape (30%), followed by being ripped off in currency exchange (16.7%).

The OFX Cross-Border Confidence Index, which was released in October, estimates the total value of missed revenue opportunity by business size, due to a lack of exchange rate confidence, to be $24.7 billion for sole traders, $25 billion for small businesses and $33.7 billion for medium-sized businesses.

For 32 year old Linda, who is also a savvy Telstra Business Woman of the Year recipient, it took her two years to figure out the impact of foreign exchange transaction fees and price variation on her business.

“For example, we might have been trading 1 Australian dollar at 63 US cents at one particular banking portal, but the actual day trading rate for that currency was 68 US cents.

“So while we are talking the difference of cents here, if you’re moving large sums like $10,000 at a time, then the variation in exchange rates can and did make a significant difference to our bottom line.”

For any SME, the $30,000 that Linda lost could have been spent on hiring more staff or marketing campaigns. Instead it was a significant loss to the business.

Australian SMEs need more easily available information, and the ability to navigate uncertainty and troubleshoot issues to manage currency volatility. Often these things can be provided quickly by an FX expert.

OFX CEO Skander Malcolm said building confidence in foreign exchange and cross-border trade is vital for Australian SMEs, particularly as the increasingly digital-led global economy makes cross-border trade a more attractive and achievable option.

“It is essential to equip Australian SMEs with the right tools and support in order to take advantage of cross-border trade opportunities and help the backbone of our economy to thrive now and into the future,” Mr Malcolm said.

“Understanding how to plan for market movements, create certainty and save money on international payments can make cross-border trade a growth-driving reality for any business.

OFX can help SMEs and consumers overcome the barriers of cross-border trade by supporting the digital experience with our teams of local currency experts,” Mr Malcolm added.

Linda has three simple pieces of advice to any Australian start-ups or SMEs who are considering doing business offshore.

  1. Always compare market rates.
    Banks may not have the best rates on offer. Doing your research at websites like or speaking to money transfer specialists like OFX can really pay off in the long-term.
  2. Understand payment terms.
    When asking for a service or product overseas be sure to ask when it will be provided before paying for it. When exchanging goods overseas, I always suggest that Australian businesses ask for an upfront payment first. Indeed, for those companies that are trading significant amounts of money it might be advisable to set up different bank accounts in various countries and move currencies when they are strong or at a favourable rate, so in other words using hedging as a strategy.
  3. Get accounting advice and put systems in place.
    For example, Xero or MYOB allow for various currency transactions and can help to simplify foreign exchange money management.

For more information about the OFX Cross-Border Confidence Index, visit

This Financy article has been written in partnership with OFX.


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