Branching out into other countries offers a wealth of opportunities, giving you access to vast new audiences to help boost sales and promote your brand. However, there are a number of obstacles to navigate on your way to reaping these rewards, one of which is managing cross-border financial transactions.
These transactions crop up in almost all areas of your business, from paying suppliers and receiving payments to managing the salaries of your employees abroad, incurring fees that are small in isolation but can quickly chip away at your profit margins. Being aware of where charges might be lurking will help you prepare for them and take steps to minimise them, keeping more money in your business.
- Map your payment flows
Are you aware of the entire sequence of steps involved in your transactions? There are several stages involved in moving money between accounts, especially between different countries, and at each stage there’s the potential for charges. Understanding your payment flows is crucial to identifying potential hidden fees.
Start by identifying your different types of transactions, such as direct debits going out and one-time payments coming in, and outline the path each payment takes, from the moment it’s initiated to when it lands in the recipient’s account. Make not of the various intermediaries involved along with way such as banks and currency exchange services, and look up their fees for international transactions.
- Compare providers
The financial services market is crowded, and fees vary widely from one provider to another. Take the time to compare options against each other, considering other financial factors like exchange rates as well as the charges to find the options that are the best value overall.
Prioritise the country-to-country transactions you make most often, such as the UK to the US, comparing your bank’s offering with that of specialist services. Using online calculators is a quick way to check the true cost of each option, with up-to-date rates, before making your decision.
- Lock in great deals
Once you’ve found a provider that offers competitive rates, consider locking in a deal for a period if possible. Financial institutions often advertise great rates for new customers, which can change quickly if you’re not careful.
Some services allow you to agree on a fixed exchange rate for core transfers, shielding you from fluctuations in the currency market. This is particularly useful in helping you navigate natural market volatility, when exchange rates can swing unpredictably and potentially expose you to higher costs, helping you stabilise your cash flow. It’s worth bearing in mind that you could also end up paying over the odds.
- Use secure channels
How you make your transactions is just as important to safeguarding company finances. People target businesses transferring money across borders because there are several opportunities to steal it as it moves through intermediaries. Using a secure service facilitating money transfer for business needs minimizes this risk as it cuts out middlemen, delivering direct, encrypted transactions.
Always verify the company offering currency transfer services before entrusting your payments with them, taking care to assess the security measures in place to ensure any transaction you make is safe. You should also protect your equipment and network with security measures like two-factor authentication which help prevent cybercriminals from gaining access.
- Review processes regularly
Finally, remember that your payment systems should evolve with your business. What worked a year ago may no longer be the most cost-effective option today. Make it a habit to review processes periodically to ensure you’re still getting the best deal. Consider the costs associated with different methods, the security of transactions and how quickly funds are transferred to ensure you’re not waiting for what you’re owed.
