What is an FX fee?
A foreign exchange transaction fee, or an FX fee, is the extra cost of making a transaction in a different currency. It might also be incurred when a purchase goes through a foreign bank.
Most cards, even FX business cards, incur some level of a fee because of costs incurred to the provider. For credit and debit cards, this can be particularly high, but even for most FX cards, it is usually around 3% of the value of the transaction.
What is the difference between credit/debit cards and a business FX card?
With a business debit card, the balance on the card is directly linked to the account itself. So there’s no way to limit a cardholder’s spending: in theory, they’re able to use the card until the account is empty.
Business credit cards are even less prohibitive. Team members can essentially spend what they like (up to the credit limit), and you’ll need to pay off the debt at the end of the month. If you don’t, you risk having to pay lots of interest and damaging your business credit score.
Both come with high FX fees, though these vary depending on which provider issues the card. This makes them impractical for business trips. But forex business cards are made for overseas travel, and provide a much smarter alternative or addition to credit and debit cards.
A Soldo card gives you the best of both worlds, and with none of the drawbacks. Not only can you use it abroad with a lower fee than most FX cards (1%), and not only can you use it on home soil, you also have significantly more control over how much cardholders can spend
Is an FX business card right for my business?
An FX business card is well worth having if your team travels for business a lot. Otherwise, fees will start to add up.
They’re particularly useful for startups and SMEs because there’s no need to establish a strong credit score before you apply. And they’re particularly useful for large businesses because you can also have lots of cards in circulation at once without giving up any control, which means you can hand them out to individual departments, contractors and freelancers.
Do FX business cards work with accounting software?
Most forex cards don’t have the data management capabilities needed to integrate with popular accounting software.
But Soldo isn’t strictly speaking an FX business card, which means it has more extensive functionality – including accounting integration. In practice, this means you can export and import transaction data to Quickbooks and other accounting apps. Soldo’s payment console also seamlessly integrates with Xero, including its automatic bank feed and accounting APIs.
Do I need a credit check with an FX business card?
No – FX business card providers will ask you for a few business details when you sign up, but not for your credit history.
So if you haven’t had a chance to establish one, or if you’ve had problems in the past, it won’t matter. Just remember that you also can’t improve on your existing credit score with an FX business card.
What are the alternatives to FX business cards?
Credit and debit cards
Credit and debit cards are a way for your team to buy what they need. But they come with substantial fees and charges for foreign payments, and because there’s no option to set rules and limits, they’re also difficult to manage.
Out-of-pocket payments
Traditionally, staff will cover their own expenses and claimed the money back at the end of the month. But this can be expensive in the short term, and problematic for those who can’t afford it. And when it comes to claiming back, it can be hard to make sure they’re getting recompensed for transaction fees, too.
Petty cash
You can use petty cash to cover small ticket items. But in reality, it won’t go very far on a business trip – and since you don’t know who’s spending what and where, you’ll likely lose track of it, too.
Are entertainment expenses VAT exempt?
Entertaining clients is not VAT refundable, but entertaining staff is. When you’re running events where both will be in attendance, you need to split costs spent on team members and clients to claim the right amount of VAT back.
Soldo entertainment expense cards make it easy for you to track what charges were spent on who and file your accounts accurately when tax time comes round. Simply organise your transactions quickly and easily in your account dashboard to optimise your VAT processes.
