Trading across national boundaries used to require the resources of a large organization. Increasingly, however, that’s no longer the case. Medium-sized businesses, and even smaller ones, are now capable of trading across the globe, with the help of a few modern techniques and technologies.
The Hidden Costs of Cross-Border Payments
If you’re going to trade with foreign partners, then you need to be able to send money overseas. But this isn’t always straightforward. Payments that cross national boundaries can incur additional costs, many of which might not be easy to spot and anticipate.
Converting from one currency to another will require paying a fee. There might also be administrative delays as the transaction is processed. And, of course, the processing itself will need to be paid for.
Payment Methods: Pros, Cons, and Pitfalls
There are many different ways to send money. Traditionally, bank accounts cooperate with one another using special, secure networks like SWIFT or Western Union. Money sent in this way is said to have been sent via ‘wire transfer’. Bank transfers use local routes, instead. In the US, this typically means going through Automated Clearing House (ACH).
You’ll get faster transfers using the former method, but it will tend to come at a cost of up to 5%.
Of course, there are now many modern, online fintech solutions which aim to replicate the advantages of a wire transfer, at a fraction of the cost. These transfers are often cheap enough that they become viable, even for smaller businesses whose overseas dealings are small-scale.
Avoiding Payment Delays and Compliance Hurdles
If you delay making a payment, for whatever reason, then you’ll harm your reputation with potential overseas collaborators. This might ultimately slow your expansion.
Worse, you might need to deal with overseas regulators, especially if you’re shipping products to an unfamiliar part of the world. It’s best to proactively ensure that your goods are fit for purpose; if you don’t, then you risk running into legal challenges that might, again, harm your reputation in the markets you’re trying to sell into.
Smarter Transfers: Choosing the Right Partner
Getting the best from your business overseas often means working with the right providers. A partner that might help you deal with international currency transfers by monitoring exchange rates and offering a secure means of sending and receiving money can be extremely valuable.
If you’re unsure of the benefits of these organizations, the best approach is often to try them. Cordon off a limited amount of your international activity, and see what improvements your business might enjoy by collaborating with a reputable, secure partner.
