Q: What is a Cross Currency Overdraft?
A: A Cross Currency Overdraft is a working capital facility. It comprises sterling and foreign currency accounts with access to an umbrella overdraft limit that sits over the different instant access currency accounts. It allows a business to aggregate their assets across all their different currency accounts together with their sterling account(s). This means that if a payment is presented to your US dollar account but there are insufficient funds in that particular account, providing that there are available funds within the group of accounts, the payment will be processed.
Q: Why would I need one for my business?
A: It provides you with flexibility in managing the timing of your payments and Foreign Currency (FX) transactions as you can choose to borrow in one currency against the credit balances maintained on another group account, thereby managing your foreign exchange risk to suit your payment flows. So, providing you’re within your overall overdraft limit across all of your accounts, then you’ll always have the funds available to make your payments.
Q: What does the Cross Currency Overdraft include?
A: The Cross Currency Overdraft includes an agreed over-arching limit (denominated in Sterling) with a standard arrangement fee and a negotiated debit interest rate. A Cross Currency Overdraft group can include current and instant access deposit accounts. Payments made from your currency accounts are processed within the same timespan as those out of a sterling current account.
Q: Which type of business can have a Cross Currency Overdraft with Santander?
A: You need a minimum of two accounts – a sterling current account and currency account; however there’s no upper limit to the number of accounts you can include. Only sterling, US dollar and euro accounts can go overdrawn within the group. A Cross Currency Overdraft group can either be across a single legal entity or multi-legal entities, for example a holding company with subsidiaries.
Q: What is unique about Santander's Cross Currency Overdraft?
A: Unlike similar products elsewhere, the Santander Cross Currency Overdraft is a fully automated product, which works with your online banking. You don’t need to contact the bank before making a payment – just set up a payee and the payment will go to the destination account. Once approved, a Cross Currency Overdraft can be set up quickly, meaning that you can facilitate international payments quickly and without hassle. The Cross Currency Overdraft product is only available for customers who have primacy banking with Santander.
Clothing business Equip Outdoor Technologies works with manufacturers all over the world and is a cash-intensive business, so the Cross Currency Overdraft complemented their existing Santander Trade and Invoice Finance solution.
“Because of the seasonal nature of the business, 65% of sales happen in Autumn and Winter. However, our product ships in the summer – and we have up to £10 million of stock on a boat that, without Santander, we cannot pay for,” says Financial Director Ryan Bennett. “With the two facilities working seamlessly, we can grow without having to worry about the finance. What’s quite neat is that we have a £14 million group facility and the bank gives us freedom to work within that as we need it.”
Relationship Director Jon Bennett adds, “We offered Equip a bespoke package. It was about understanding the business and tailoring our solution to them, not giving them an off-the-shelf product.”
For more information about how to access a Cross Currency Overdraft, please contact your local Relationship Director.
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