The simplest and most cost effective way of effecting payment to suppliers is usually to write a foreign currency cheque. However, as the use of cheques is being phased out a lot of suppliers prefer payment to be made by Bacs or debit /credit card. This is where having a foreign currency account really comes into its own as it avoids having to arrange electronic transfers or the purchase of a draft from your bank. The foreign currency account can be either funded by currency receipts or periodic currency purchases from your bank. Currency purchases can usually be made by telephone or internet dealing.
Whilst the simplest method of paying is by cheque writing, there are other methods available for one off transactions or where additional payment security is required. Banks will sell foreign currency drafts to their client’s, however these offer little advantage from the purchaser’s perspective other than an ability to make payment when no foreign currency account exists, i.e. for one off transactions. A fee is usually payable for the purchase of a draft.
The most secure payment method is an electronic bank to bank transfer. Whilst normally more expensive than the previous methods it provides cleared funds to the recipient at a known value date and ensures safe receipt. This is especially useful where goods are dispatched upon receipt of payment.