Buying Overseas and Making International Payments

Whether you are sourcing windows, a kitchen or an entire kit house, sometimes you just can't get hold of what you want in the UK, or at least, not for the price you want! Many self builders look overseas, particularly to the continent, for innovative technologies or to make savings on products and materials.


International Payments


This sounds appealing but it's not always straight-forward, and whilst there are some pitfalls to be aware of, there are also some simple ways to help things run smoothly and to keep costs to a minimum.

Whatever your reasons for buying abroad, there are two main aspects to consider and we'll take a look at each in turn:

  • Bringing your product in.

And

  • Sending your money out.


Product In

There are a whole range of issues, regulations and legal obligations to be aware of when bringing in a product from abroad and the extent to which they'll affect you will depend largely on the country of origin, the product itself and the company you are dealing with.


Importing Materials


Your first conversation should be with your supplier, the chances are that they have sold to someone like you in the UK before and should be able to advise you on how to proceed.

Here are some of the issues you'll need to consider:

  • Customs Duty and Import VAT - These should only be payable from countries outside the EU (except EU 'special territories'). Visit HMRC: 'Tax on goods ordered or bought from abroad' for more information.
  • Customs Declarations and Other Administrative Documents - Imports must be accompanied by the correct documentation to avoid delays when clearing Customs. Check with HMRC which paperwork is required.
  • Safety Codes and Legislation - You are responsible for ensuring that anything you bring in to the country meets relevant local safety codes and other legislation, including building regulations (if applicable).
  • Freight/Handling - Who is organising the freight, how much will it cost and how long will it take?
  • Insurance - At what point does the supplier's insurance cover cease, when does yours kick in and how is your property covered during transit?

Your supplier may take care of some of these items for you but, as usual, check and plan ahead. It's no use finding out you're not insured when your kitchen has been damaged in transit or that your windows have been held up in customs because the paperwork is missing.

Money Out

Making payment for your goods is the second part of the equation and there are two main items which can affect your costs:

  • The costs of transferring currency.
  • Currency fluctuations.

Transfer Costs

One variable you can manage and make a saving on is the cost associated with transferring your money.

There are numerous methods of transferring money overseas including:

  • The Post Office.
  • Bank Transfers.
  • Online Money Transfers such as Paypal.
  • Specialist Debit or Credit Cards.
  • Foreign Exchange Brokers.

The exchange rates for each system vary, as do sender and recipient fees, and the suitability of the method depends on the nature of the transfer.

If you are buying materials or products from abroad for a self build project, the chances are, you'll be spending a significant amount of money and for larger payments, nothing really competes with the larger foreign exchange brokers who have the benefit of sophisticated technology and the buying power to offer the best rates.

A specialist payments company such as Travelex International Payments offer the best deals. They don't charge any fees on transfers above £2,500 (just £5 - £7 below £2,500) and guarantee to beat any other exchange rate on the market. They don't charge any fees on transfers above £2,500 (just £5 - £7 below £2,500) and guarantee to beat any other exchange rate on the market.

When using a specialist payment provider make sure that they are a Financial Services Authority (FSA) authorised payment services firm which means that your money is safeguarded from company accounts which offers some protection in the event something goes wrong with the company while they are holding your funds.

Currency Fluctuations

Currency fluctuations are an unknown entity (unless perhaps you're George Soros!) but they can have a significant impact on cost.

Let's say (hypothetically!) you sign off an order for a German kit house in November:

November- €150,000 @ €1.3:£1 =£115,384.62

You are invoiced for payment in May and the rate has changed:

May- €150,000 @ €1.19:£1 =£126,050.42

That's a £10,665.80 increase on the original cost!


This is a very simplistic and extreme example and of course it can work both ways but it illustrates the point.

There are however ways to manage this, one of which is called forward buying.

Using a currency specialist such as Travelex will not only help to reduce fees and obtain better rates than using your bank but you can also fix your exchange rates for materials and products being bought in foreign currencies for the duration of your construction project. This is referred to as forward buying and enables you to protect yourself against adverse movements in the rates impacting your budget.


For example

A project commencing in July requires €50,000 of materials to be purchased in two months time.

Project manager A. decided in July to forward buy these Euro at 1.2807 locking in his budgeted rate and securing the material cost at £39,041.

Project manager B. waits until September to pay for the materials when he needs them. At the time the rate is 1.2505, this means his materials cost is £39,984.


forward buying example


Project manager A saves £933 on the material purchase and has not had to spend additional time focusing on the exchange rates and recalculating costs during the past two months.

There are benefits for some self builders in sourcing products from overseas and whilst there are risks, there are also plenty of ways of keeping their effects on your budget, your schedule and your hairline to a minimum.


Remember - This article does not constitute financial or legal advice and you should always carry out your own research or seek up-to-date professional advice.




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