No matter if you run a small or large business, making it global is the fastest way to ensure growth and unlock opportunities. Going global gives your business bigger exposure in the international market, and you can considerably increase your revenue. For that, you have to initiate international transactions for example selling euros for pounds.
However, one common struggle you may face is complicated international payment processes. It may incur a sizable charge while accepting a global order, and you may have to reconsider your decision for example when sending money from the UK to the USA. Therefore, it is wiser to know the ins and outs of small business international payments so that you can tap into a huge market overseas!
Following is some basic information that you need to keep handy for small business international payments.
Recipient's name
Recipient's bank details
Country where you want to send money
While there are several options for international payments, you must know the step-by-step process to manage them.
International payments in business begin with somebody buying goods or services overseas. Following is the roadmap of how the money travels cross-border
Make the purchase
Once you are ready to pay for your product or service in international currency, you need to rely on international payment options.
Select an FX provider
Next, you have to choose a bank or other FX provider to initiate the international payments. In both cases, you have to open an account with the provider and go through an identity check.
Know the international payments information
Before you send the funds, you need to know how the supplier would like to get the payments. It will have an IBAN for overseas payment in a SWIFT network.network. If you are transferring money from the UK to Australia you will need a BSB.
Decide and inform the amount.
Now you have to tell the bank or alternative FX provider how much you want to pay internationally.
Check the calculations of the international payments
The FX provider will calculate your payment amount to convert the currency. They will do so after applying the exchange rate you both agreed to. In this step, they can add a margin (typically 0.1% to 4%) alongside international payment fees.
Make the transaction happen
After you inform the bank or FX provider how much to pay and provide the beneficiary's details, they will complete the transaction. You have to settle the amount paid with the additional charges (if any), usually within 2 days.
Intermediary institution
Your provider can also use an intermediary institution once the international payment is on the system. They will help settle the 'backend payments' like post-trade settlement, ownership records, etc.
Beneficiary bank
After the stipulated time, the beneficiary bank will receive the funds in the correct currency.
The international payment received
Usually, your beneficiary will receive the small business international payments the next day (depending on the payment method you choose).
While choosing international payments, you need to choose the right provider. While fast, simple and cost-effective transactions are some major criteria, you must not overlook the security criteria.
Following are pointers you need to consider:
1. Competitive rates
The exchange rate plays a major role in deciding how much you have to pay in your currency. Hence, it is better to always check with different FX providers to settle for the most competitive one, including all the fees. While some may waive fees, others add this to the FX margin. This may make your international payments more expensive. For example when buying Turkish Lira check the exchange rate and fees as this fluctuates a lot.
2. Speed of the payment
Nobody knows better than you that business opportunities do not wait for long. So, you have to act fast or in this case; you need your payments to reach on time to your supplier. Therefore, while choosing an international payment provider, ask them about the estimated time for the transaction to be completed.
3. FCA - Authorised
Choose an international payment provider registered with HMRC as a money services business. They also must have the authorisation of the Financial Conduct Authority (FCA). These will ensure that your money is well protected.
4. Safeguarded funds
Usually, FCA-authorised providers offer a compensation scheme for the transactional amount. It makes sure that your payment amount is different from the broker's, and if anything happens to that provider, you do not face any monetary loss.
5. Online tracking
While paying overseas, you need to know the movement of your money. Hence, choose a provider that offers online tracking of your international payments. Also, ask them if you can initiate multiple international business payments at the same time. It will help you in the future.
6. Account manager
Sending funds overseas is a serious matter, and it is normal to have some queries on your behalf. Thus, choose an international payment provider who can quickly address your queries and assure you about the ongoing process.
These are some vital points to consider for international payments. However, you must also know the best ways to make international payments for small businesses.
Banks are always the first option that comes to mind when discussing transactions. However, international payments through banks are usually pricey, time-consuming and complicated!
Here are a few more options you choose for small business international payments:
A. Payment gateways
It is one of the most popular payment options nowadays. Stripe, PayPal, and Razorpay are some of the largely used payment gateways across the globe. This option is convenient as it is compatible with online stores and websites, enabling customers to make purchases through their services.
Payment gateways usually keep a share of every transaction through them. They may also incur additional charges for international payments. However, small businesses work perfectly well.
B. SWIFT payments
It is a traditional international payment system between two banks. It allows you to transfer funds from one bank to another bank. However, in that case, both banks need to be in the SWIFT network, and they must have a SWIFT code to initiate any transactions.
Besides visiting the nearby banks, you can also make small business international payments through the bank's website.
The added fees for this international payment option are generally low. However, the processing time is a bit lengthy.
C. International transfer providers
You will find several international transfer providers online, and they leverage the latest technology to make international payments. The perks of choosing such international transfer providers are you can transfer money through your bank, credit or debit cards or online.
They also offer competitive exchange rates and incur low charges on smaller fund transfers. Your beneficiary can also get their funds directly on their mobile phone or opt for cash pickups (if available in that region or country). While the advantages of using this payment method are great for international transactions, you need to ensure their reliability before going forward.
Now that you are aware of the nitty-gritty of small business international payments, choose wisely to remain stress-free and explore the sea of opportunities! Irrespective of the payment method you choose, always shop around for the most competitive exchange rate that determines the cost of any international payments, large or small. And if you are looking for a reliable and hassle-free source of currency exchange, then the Currency Club can be your ideal solution.
We have made every effort to ensure that the information published here is correct and accurate, however you should check and confirm the latest exchange rates with The Currency Club directly prior to making a decision. The information published is general and does not consider your personal objectives, financial situation or particular needs. Full disclaimer available
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