Unfortunately, there is a number of mistakes that companies make when sending international business payments that can impact this efficiency and cost-effectiveness. The results include delayed payments, frustrated staff or suppliers, and higher charges, to name a few.
Take a closer look at 5 common mistakes businesses make when sending an international money transfer. Find out why they’re considered erroneous and learn what the better options are.
Methods of payment in international business
It’s appropriate that we explore the methods of payment used in international business before we delve into common mistakes and the safest way to transfer money internationally. The methods include:
Bank wire transfer – International bank wire transfers are arguably the most familiar method. However, their often weak exchange rates and high transfer fees mean they’re not the best method for businesses.
International money transfers for businesses – International currency specialists such as moneycorp offer fast transfers and lower fees than most banks. In addition to transferring money internationally, your business can take advantage of options such as recurring transfers, forward contracts, limit orders, and multiple currencies.
International payroll services – An international payroll service makes it easier to pay staff based abroad. However, you will need to find other ways to make transfers if your business needs to pay for anything else.
Mailing a cheque – Some businesses occasionally make international payments by mailing a cheque. The safety concerns, unreliability of delivery, transit time, and the possibility that local banks won’t accept cheques are just a few of the reasons why this is not the best way to make international business payments.
Mistakes to avoid when making international business payments
Mistake 1: Not exchanging currency before sending
Some businesses make the mistake of not exchanging currency before making an international payment. As a result, a potential problem could be that the exchange rate could change before the funds reach the recipient. If the rate drops, the recipient will receive less than the intended amount, which is not ideal if the payment is for an inflexible amount, such as paying a vendor.
Prevent this from happening by exchanging your GBP, EUR, or USD to the local currency before you send it. This is possible with moneycorp international payments - you can create an online multi-currency account.
Mistake 2: Not checking transfer fees
Whether businesses use a bank or an international currency specialist, they often make the mistake of not checking transfer fees. Banks, and some specialists, usually charge a flat processing fee known as a service, transfer, or transaction fee.
This happens upfront so businesses are aware of it. However, because they’ve forgotten to check for other fees, there’s a chance they could be surprised by:
- Conversion or exchange fees – charged when you convert currency. Some banks and specialists charge them upfront, while others deduct them from the amount being converted.
- Third-party or intermediary bank fees – charged by interim banks used for transferring money internationally. Such fees are associated with the recipient’s bank.
- Receiving fees – may include delivery and admin or processing fees. The recipient’s bank or specialist may charge receiving fees.
Avoid this mistake by using an international currency specialist that offers low or no transfer fees, such as moneycorp.
Mistake 3: Not checking the estimated delivery time
Some businesses make the mistake of not checking the estimated delivery time when using even the most efficient ways to transfer money internationally. This can result in delays, which can negatively impact payments that need to be made by a certain date.
There is no standard delivery time for international payments. Some may take 2 to 3 working days, while others may take 5 days or longer, depending on the method used. Delivery times can also be affected by factors such as:
- The currency you exchange GBP, EUR, or USD for
- The use of intermediary banks for the transfer
- Time zone differences
- Currency or bank cut-off times
- Weekends and bank or public holidays
Avoid making this mistake by checking the estimated delivery time well in advance and arrange your transfer accordingly.
Mistake 4: Not checking the details
Failing to ensure that the recipient’s details are correct can be an expensive, frustrating mistake. Depending on the method used for making international business payments, you may be required to provide a variety of details, such as:
- The company’s name and address
- The desired foreign currency
- The company’s bank account or international bank account number (IBAN)
- The company’s bank’s SWIFT code or Bank Identifier Code (BIC)
Supplying the incorrect details can make it difficult for the bank or international currency specialist to trace and reclaim money sent to the wrong recipient.
Prevent the mistake from happening by finding out what details are required by the service provider and by thoroughly checking that the recipient’s details are correct.
Mistake 5: Not knowing the exchange rate
Exchange rates fluctuate and some businesses make the mistake of not finding out the exact exchange rate before making a payment. This can be to their detriment, as well as to that of the recipient.
Avoid making this mistake by ensuring you keep an eye on exchange rates. You can monitor the exchange rate in moneycorp’s Currency Zone.
Get in touch for more advice about international business payment solutions
Turn to moneycorp if you’re looking for a cost-effective, efficient and hassle-free way to make a business payment internationally. An online multi-currency account allows you to manage funds and transfers conveniently and securely. You can hold more than 120 different currencies, receive funds, and set up payments.
With our various products and services, moneycorp helps protect against foreign exchange market volatility and assists with cash flow forecasting.
Want to know more about payment methods for international businesses? Get in touch with us for more advice about our international payment solutions.