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Five ways to help save on international transactions

Money-saving tips for businesses with foreign payments

To help combat the outlook, here are five money-saving tips for small businesses to consider
To help combat the outlook, here are five money-saving tips for small businesses to consider

As the pandemic continues to cause shutdowns across the globe, small and medium-sized businesses are among the hardest hit. Though some operations are slowly re-opening across the country, it is unclear as to when normal levels of business will resume. It’s also unlikely that, after weeks of quarantine, companies will be able to restart without any impact from the closures. For many, weeks without customers or limited operation may lead to a significant reduction in profits and weaker future forecasts. To help combat the outlook, here are five money-saving tips for small businesses to consider:

  1. Stop paying to receive checks: When a business receives a check from an overseas payer, that amount often goes through multiple banks and intermediaries before deposit. Aside from the fluctuating exchange rate, which if unfavorable can greatly reduce the amount, each party can remove their own fees from the total, as a charge for processing. Additionally, each bank typically has a standard rate for exchanging and depositing these payments, which is normally fixed, regardless of the total amount. So, an incoming payment of $100 or $1,000 will have the same extra costs, which can add up.

Regardless of the amount, paying to receive incoming international payments is generally avoidable.

Ask now: How can I receive foreign payments without the fees?

  1. Pay vendors in local currency: Sometimes overseas partners will provide bills in USD, EUR and other currencies that are not used in their home country. While this might seem useful to the payer, there can be hidden costs to this convenience. Because all currency pairs have a degree of volatility, billers often inflate their invoices to help cover the cost of any FX shifts.

Consider asking foreign suppliers if they wish to receive payments in their local currency. This easy change can provide discounts on invoices going forward as that extra risk will no longer be undertaken by the biller.

Read the free e-book: How to Lower Costs with Local Currency Payments

  1. Move away from checks: Not only are paper checks often expensive to work with, as well as many physical locations continuing to be closed for the pandemic, they can also be difficult to access. Mailing one means that the sender is unaware of the date of receipt/cashing and may be required to keep a larger amount of money in their account to cover all outgoing payments. For recipients of international funds, there can be a time lag, as well as the unspecified fees taken out by intermediary banks.

Either way, managing payments through checks can take unnecessary funds away from a business’s bottom line and it’s past time companies consider the switch to an online payments platform.

Read more: The high cost of issuing small checks

  1. Automate manual tasks: Often, a number of employees spend significant portions of time on tedious, manual work. Not only is this a poor use of valuable resources, but the ongoing practice can lead to expensive mistakes. Consider moving some administrative responsibilities online for both accuracy and potential cost-savings.

Read more: How a Texas law firm tackled mounting paperwork

  1. Consider FX hedging: If an organization works with foreign currency, there is a strong argument for considering currency risk management strategies. Though 2019 saw low volatility, 2020 has already seen significant dips and rises from major currency . For those who send payments overseas or budget for foreign costs, it can be incredibly stressful to simply wait for the day’s exchange rate and bank processing fees in order to view the final cost of an invoice. Find the right strategy for your business and stop accepting currency volatility as inevitable.

Read more: The pros and cons of foreign exchange risk management

The ongoing pandemic is a challenging time for businesses of all sizes. Small and medium companies are likely struggling with cost-saving methods and strategies. Finding savings within the payments realm can be particularly useful as these savings or discounts would be ongoing and could provide a significant impact to a bottom line. Additionally, many of these options are simple and quick to implement. Consider these possibilities to combat the economic damage of the shutdown – and beyond.

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