If your business involves buying goods and services from abroad, the ideal payment system should be able to cover your business from depreciation, banking service charges, and other business costs. And so, it can be helpful to consult your international suppliers regarding payment channels and develop a suitable payment strategy.
To start, you can utilize fintech innovations for your international payment solutions. For instance, today, banks and financial technology companies could offer products such as multi currency business card that can significantly impact payments across borders. Leveraging various financial services does not only offer you convenience but can also help cultivate sustainable business relationships with your suppliers.
Furthermore, here are some insights into how you can reduce fees when paying international suppliers and safeguard your profits.
1. Open A Multi-Currency Bank Account
Owning a multi-currency bank account is perhaps an excellent addition to conducting international business. It enables you to hold multiple currencies that can work to your advantage when paying international suppliers. Moreover, all your business transactions can be localized depending on the suppliers’ region and preferred currency.
However, you must consult financial institutions and learn the pros and cons of opening and maintaining a multi-currency bank account. Your suppliers can also present payment options to decide which works best for your business.
2. Use Digital Wallets
Technological advancements are pushing for more convenient payment systems. For instance, digital wallets have become crucial players when purchasing goods and services abroad. Some platforms offer competitive fees to users as the financial technology space continues to evolve with the introduction of cryptocurrency and mobile payment applications.
With that in mind, reviewing the digital wallet platforms and fees is critical to determine what’s best for your business transaction. Also, it’d be good to note that government regulations on payments abroad can still apply in your locale. If you must use a digital platform, ensure conversance with their services to avoid fraud.
3. Pay Cash
Paying cash is perhaps one of the commonly accepted ways to reduce international fees when transacting abroad. In this approach, you can save time and money converting currencies based on International Exchange Rates that can incur more charges from forex bureaus or banks. If your suppliers have outlets or fulfillment centers in your locale, they can refer you to one and remit cash payment once you receive the package.
4. Use Third Party Solutions
As technology continues to evolve, more companies look to outsource payment operations at an affordable rate. After all, it’s one way to avoid overheads in the business and ensure the suppliers get timely payments.
And today, the financial spectrum is generally more open to intermediary involvement in international payment systems. You can import or export goods and services through proxies and pay using a third-party platform. For instance, you can outsource services for freelancers in several fields and send payment through their media. For example, platforms like Upwork and Fiverr have payment systems to ensure harmony between freelancers and clients.
On the other hand, suppliers’ channel of payment preferences is a crucial consideration affecting how you transact your business abroad. So, learn the best ways to avoid paying more than you require by reviewing available options and consulting your supplier.
5. Leverage Banking Services
Financial institutions offer many products that can help reduce the cost of international business transactions. Credit and debit cards are the most popular mode of paying or acquiring loans for business. But you can leverage options like cash-backs as you pay for items and services abroad.
In addition, banks are now considering the inclusion of digital currencies in services offered to customers. They share the same sentiments with payment platforms such as PayPal, which have integrated cryptocurrency options for users. Therefore, learn how to tap such innovative ways to transact internationally.
6. Settle On A Currency
Different countries have unique currencies and may affect your international business transactions. Currently, the US Dollar is a standard reference in most international purchases. But when converted to your suppliers’ local currency, it might short-change them or reduce their profit margins.
With that in mind, suppliers might inflate the invoices sent to you to cover for such currency inefficiencies. So, deciding on a suitable currency is crucial to avoid incurring extra costs when paying international suppliers.
7. Plan Your Purchases Abroad
Generally, the world trades on seasonal charts that dictate the prices of most products worldwide. It also significantly impacts the value of freight, including tax impositions on items sourced for international suppliers. So, learning when the tide goes up is crucial when planning and timing international purchases.
In addition, you can overpay and ask your international suppliers if they can offset the excess amount with your subsequent purchases.
8. Scan The Market For Better Prices And Discounts
Aside from utilizing technology to reduce fees when paying international suppliers, you can also approach it the traditional way. For instance, before buying goods and services, it’s always wise to shop around and review quotations from several suppliers. It enables you to determine which ones have favorable terms of service and possibly secured payment systems.
However, do not compromise the quality of the services you receive while looking to reduce costs. For instance, the medical field requires utmost care when buying medical equipment for hospitals. And so, to minimize fees when making international transactions, look for the best prices around or even request discounts for bulk purchases.
9. Establish Contracts
Lastly, when negotiating the prices for your international products and services, it’s wise to consider locking a suitable price in a contract. This way, you’ll be able to withstand an economic downturn that can affect your business and payments abroad. For instance, international wars or riots could lead to disorder and disrupt production and the supply chain. And in most cases, it carries heavy financial implications. With that, it’s recommended to establish a contract that binds you and your supplier to a specific rate when transacting and doing business.
International payments can be a bit more complex, especially if you don’t know how to navigate specific payment systems. And in some cases, your international suppliers may only focus on receiving payments from your end and may not consider the added cost or other implications. So, reviewing your options, including the technology available in the financial ecosystem, can be crucial to helping reduce fees charged for international transactions.