It is increasingly accepted as ‘industry standard’ in the aid and development sector to deliver local currency to field accounts and partner organisations in the developing world, as opposed to simply sending hard currency transfers via the correspondent banking system.
StoneX’s Michael Stachowiak, Head of Business Development (Global Payments), Australia and New Zealand, tells ACFID: “This new approach has been extensively proven to reduce costs, enhance accountability and improve control over funds.
NGOs with international commitments require the ability to procure foreign currencies. This is an inherent by-product of their mandate to deliver aid in other countries. Transacting in foreign exchange markets can often be quite daunting, particularly when the funds are destined for nations in which currency transfer is the most challenging, such as South Sudan, Myanmar, and Vanuatu. Knowing which provider to use can be complicated as there are increasing numbers of players in the market, all promising to save NGOs money.”
To simplify the provider selection process, Michael shared with ACFID a few tips for NGOs to consider while working to meet their foreign exchange goals:
- When considering adding a provider, ask them about their correspondent bank network and which banks they use to deliver specific currencies
- Does the proposed provider have in-depth knowledge of the market to which the funds are being sent?
- Ensure that an all-inclusive rate is secured upfront and that the delivery amount is guaranteed
- Always try to obtain a comparison rate
- Understand the process
- Check on the financial viability of a provider
- Ideally, you should avoid paying in advance – why should you have to take a credit risk on your provider if they aren’t willing to take one on you?
“Lastly and most importantly, always remember that your funds are your assets—maintain as much control over them as possible. You should make providers compete for your business and demand transparency, efficiency, and security.”
Michael went on to share the latest update with ACFID on the banking situation in Myanmar:
“Due to ongoing protests over the past few weeks against the military coup, banks remain closed along with all forms of interbank settlement. With no assurances of when the situation will stabilise, delivery of MMK continues to be unavailable. StoneX is closely monitoring the situation and providing updates soon as they become available.”
Michael Stachowiak from StoneX will be speaking at the upcoming Finance Managers Community of Practice event, where he will be delving into greater detail regarding points to consider when choosing an FX Payments provider.
ACFID formed a Corporate Partnership with StoneX (previously known as INTL FCStone), one of the world’s leading Global Payment Exchange providers, in 2020, after their years of longstanding support and sponsorship of the ACFID National Conference.
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