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I run a small business that has, for years, provided services to clients overseas. For European clients we invoice in Euros - so many years ago we opened a Euro account with a UK bank. For anyone without experience of this, it may surprise you to know that you don't get a Euro Debit Card with a Euro account. You do get a Euro cheque book and can send Euro payments to people by cheque. The catch is that there is a substantial transaction fee for each payment - the fee depends on the size of the payment.
You also get a charge of around £7 for every inpayment made into your Euro account. Rather unhelpfully, the bank doesn't show this charge on your statement - they just deduct it from the inpayment. So, if you invoice a client 1000 Euros you will get an inpayment of approx. 992 Euros. The exact amount, of course depends on the bank's exchange rate that day. You can probably see this makes it difficult to balance the books - you have to work out how much the bank charged in Euros add that back to the Euro Account and then make a ledger entry transferring that amount to the Bank Charges Account. In recent years we have been able to avoid the inpayment charges by joining something called 'Bankline' - but that costs us £20 per month - much more if you are a bigger business.
But even these charges are not the worst bit. Imagine you are going to visit one of your clients in, say, Germany. You will need some cash to pay for taxis, fares, subsistence and hotels. You have an account with Euros in it - so you might assume you can go to the bank, write a Euro cheque "to cash" and draw out what you need. NOT SO! If you want to withdraw 100 Euros, the bank will convert it to Sterling, then convert the Sterling back to Euros and you would end up getting about 90 Euros for every 100 Euros of your own money you withdraw! We spend, literally, thousands of pounds on bank/currency exchange charges each year - but still not enough to entitle us to a proper bank manager!
If the government wants (actually let's be honest, they NEED) small businesses to export after Brexit wouldn't you think they might consider taking action against the banks for this kind of exploitation.
Any views on the legal position - or if anyone knows a way round these charges I would be grateful.
You also get a charge of around £7 for every inpayment made into your Euro account. Rather unhelpfully, the bank doesn't show this charge on your statement - they just deduct it from the inpayment. So, if you invoice a client 1000 Euros you will get an inpayment of approx. 992 Euros. The exact amount, of course depends on the bank's exchange rate that day. You can probably see this makes it difficult to balance the books - you have to work out how much the bank charged in Euros add that back to the Euro Account and then make a ledger entry transferring that amount to the Bank Charges Account. In recent years we have been able to avoid the inpayment charges by joining something called 'Bankline' - but that costs us £20 per month - much more if you are a bigger business.
But even these charges are not the worst bit. Imagine you are going to visit one of your clients in, say, Germany. You will need some cash to pay for taxis, fares, subsistence and hotels. You have an account with Euros in it - so you might assume you can go to the bank, write a Euro cheque "to cash" and draw out what you need. NOT SO! If you want to withdraw 100 Euros, the bank will convert it to Sterling, then convert the Sterling back to Euros and you would end up getting about 90 Euros for every 100 Euros of your own money you withdraw! We spend, literally, thousands of pounds on bank/currency exchange charges each year - but still not enough to entitle us to a proper bank manager!
If the government wants (actually let's be honest, they NEED) small businesses to export after Brexit wouldn't you think they might consider taking action against the banks for this kind of exploitation.
Any views on the legal position - or if anyone knows a way round these charges I would be grateful.
