With the ever-growing importance of globalization, most companies today are somehow reliant on international dealings and transactions. Many private entities work with overseas customers, vendors, suppliers, and business partners. Such circumstances require almost everyone to use a secure payment system.
Growing a business sometimes means sourcing supplies from another country. Some global companies could offer cheaper raw materials or sustain cost-effective labor resources than your local supplies. All these and more could potentially leverage your business and allow you to be more competitive in your industry. However, if you’ve been suffering from hefty charges, it’s best to know what the best alternatives are for your international supplier payments.
Consider the following methods for saving on your international supplier payments:
1. Credit Card
Your bank or card issuer will probably charge a percentage fee if you provide your credit card information online or directly to someone you’re paying. The cost will differ depending on the credit card provider you have. Paying bills in another country is easiest when using a credit card. But some businessmen aren’t exactly happy with the credit card fees. Hence, you can try out business virtual credit cards instead.
Paying international suppliers is almost instantaneous with this speedy and hassle-free payment system. There won’t be delays or slow movement for payment transaction processes, unlike wire transfers. Their foreign currency exchange rate might come with a reasonable profit margin, but that’s minimal compared to other big banks. Also, the fixed rate allows you to anticipate uniform markups, so you know how much you’ll need to pay as charges. You don’t have to worry about hidden costs and whatnot.
Another advantage of using credit cards online is they don’t come with a transaction fee. Everything is done online, emphasizing your security, so you can rest easy knowing that all your details are encrypted and safe. Contact your business virtual credit card provider beforehand, and you can discover whether they handle the international currency you’re using.
2. Local Bank Account
Most banking is done online these days, so it’s probable to set up and open an account with the bank you’re constantly transacting with. Perhaps you can visit the country during business trips, and it’s an excellent chance to open a local account instead. The key is to know the requirements and pass all necessary background checks.
Although you can deposit early on some bulk funds upon opening the account, another way to fund money for future transactions is through international money transfers. Eventually, the funds can be used to pay bills as needed.
This makes it the best choice if you have numerous transactions with different overseas companies from the same country. You’ll save a great deal from transaction feed and bank charges. Paying a local bill in a local currency with a local account is also so much easier.
However, the only downside is the required document and processes for opening an account in a foreign country. You need to ask first as some countries might not allow foreigners to open a bank account with them.
3. Wire Transfer
Sending funds by wire transfer is a convenient and straightforward method. It’s possible to use this payment method with most suppliers, but before proceeding with the payment transaction, you have to inquire about their charges and exchange rates. Most money transfer companies specializing in foreign transfers offer more competitive rates than banks. However, this will depend on the timing, so you must research and inquire before transactions.
In more specific terms, a wire transfer is an electronic transfer of funds between two banks or credit unions. Wire transfers internationally are referred to as remittances. Depending on your bank, the fund transfer can take a few minutes to a few days. For the most part, domestic transfers are faster than remittances.
Slow-paying countries can cause remittances to be delayed, among other reasons. There could be delays, holidays, or limited banking hours that might slow down the transfer. However, the funds should be available immediately after appearing in the bank account, making it convenient for the recipient to utilize them right away.
4. Payment In Local Currency
Some of your international vendors may request payments from you in different currencies other than their local ones. This is partly because they’re probably considering you and might feel you should pay in other currencies. For instance, they might request payment in dollars as it’s more of a compromise for your local currencies.
However, this might come with heftier charges and hidden costs. Therefore, it’s better to pay your suppliers in their own local currencies. Having the biller assume less risk in the future can result in discounts on invoices in the future.
A provider that offers low-risk, seamless transactions, great rates, speed, and peace of mind is the best choice for merchants paying their overseas suppliers. Thankfully, you now have more options, as mentioned above, so you can choose which one is most convenient and cost-effective for your business.