Being able to make and receive B2B cross-border payments is essential for growing e-commerce, capturing new markets and facilitating long-term growth for your business.
But cross-border payments are complicated. One of the biggest headaches is the long transaction times due to:
- point-to-point wire transfers that may have to clear anywhere from three to 10 different banks, each of which may assess a fee
- the foreign exchange conversion rate from one currency to another, and
- checking that you’re in compliance with financial or data regulations of another country.
In a webinar hosted by bank communication, integration and reporting SaaS company Axletree, Jonathan Church of B2B payment fintech provider TransferMate compared it to “getting on a very old train that runs on very old tracks and stops at an awful lot of stations.”
Strategic Treasurer LLC Managing Partner Craig Jeffery continued the thought. “Each of those stops creates another level of opaqueness. It’s harder to see where transfers are, what they cost, and it creates delays,” he said.
The cost that Jeffery mentioned includes unforeseen additional bank handling fees that can pop up at any stage of the payment lifecycle.
New alternative for cross-border payments
Thanks to fintech innovation – including global payables automation solutions that come with currency conversion, tax compliance and OFAC/AML check components – backed by partnerships with financial institutions, a revolution’s been unfolding in cross-border payments to make them faster, more cost effective, more transparent and easier to reconcile using tools like same-day transfers and multi-currency digital wallets.
As you evaluate which cross-border payment platform will be the best fit for your company, also consider implementing these international payment best practices for your Finance team:
- Define the payment methods that would work best for your company and vendors – wire, PayPal, ACH, card, cryptocurrency, etc.
- Assign approval control. Be sure trusted managers are tasked with reviewing cross-border payments.
- Validate tax information. Collecting as much data as possible for transactions can help reduce risk. This includes gathering forms like W-8s and VAT IDs to comply with FATCA rules. Also, make sure your staffers have a process over time for updating info like verifiable names, addresses, account numbers (you may have to use an international bank account number validator) and country-specific requirements.
