Contractors' Questions: How best to receive payment from the US?

Contractor’s Question: For my ‘Plan B’ as a contractor, what’s the best way to receive payment from the USA?

PayPal, which I’ve used until now is too expensive, and when I tried a US cheque via my bank, it took up to eight weeks to clear. I looked at moving accounts, but the 8-week wait seems standard. There are shops on the high street but they look untrustworthy, and my US clients all seem to loathe using direct transfer because of the cost to them (about $65).  Am I missing a trick?

Expert’s Answer: Where monies are being received in a currency other than the one which you ultimately require the funds, the impact on the amount being received can be from both the exchange rate fluctuations and the charges levied for facilitating transfers.

Using an authorised currency broker can help to mitigate against the currency movements and greatly reduce or indeed, in some circumstances, remove the charges connected with carrying out a currency exchange.

In addition, if the payments are regular and can be amassed before carrying out the exchange, a broker that is authorised as a E-money Institution can hold the funds and will aim to achieve a better rate of exchange based on the volume being transacted.

Currency brokers will hold currency accounts in the currency being paid so that at the point of receiving the payment, there is no currency change to be made. These accounts may not be held in the country of that currency so may still incur a charge for a payment being made to a same currency account outside of the origin country. For example, sending USD to a USD account in the UK from the USA may well incur a charge.

Eliminating charges altogether would be very difficult to achieve. However, finding an established route for the payments to go through so that any charges and fees are clear will reduce the burden to all concerned; ultimately assisting in the most money landing in the destination account.  

The expert was Euan McLachlan, a manager at FC Exchange.

Editor's Note: Related --

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