RFXplainer: How RationalFX same-day value date guarantees the best exchange rates

The value date in international payments refers to the date on which a transaction is settled, that is, the date on which the funds are transferred from one bank account to another.

In the world of international payments, the value date is critical as it impacts a number of important aspects of the transaction, including currency exchange rates, interest payments, and the timing of cash flow.

1. Currency exchange rates

When making international payments, it is important to consider the currency exchange rate, as this will determine the amount of money that you receive or pay in the destination currency. The value date is a crucial factor in determining the exchange rate that will be applied to the transaction. The value date will determine which exchange rate will be used, whether it is the spot rate, which is the rate at the time the transaction is executed, or the forward rate, which is a rate agreed upon in advance for a future date.

2. Interest payments

In some cases, international payments may involve the transfer of funds from one country to another for a period of time. During this time, the funds may earn interest in the receiving country, or the funds may be subject to interest payments in the sending country. The value date is important in determining when these interest payments will be made.

3. Timing of cash flow

The value date can also impact the timing of cash flow in international payments. Depending on the value date, funds may arrive sooner or later than expected, which can have a significant impact on the cash flow of a business.

In conclusion…

The value date is a crucial aspect of international payments that should not be overlooked. It can impact currency exchange rates, interest payments, and the timing of cash flow, all of which can have a significant impact on the financial health of a business. As such, it is important to carefully consider the value date when making international payments and to ensure that it aligns with the goals and needs of your business.

With RationalFX, clients can now expect a value date for the same day* a transaction is booked. Same-day value date is available on most currency pairs such as EUR/USD.

If you’d like to speak to one our currency specialists on how they can help you pay for your property abroad, click here.

*Same-day value date (or T+1 day) applies to most currencies and is valid for transactions booked before the specified cut-off time.