How To Pay International Suppliers And Maximize Profits
When you run a business, it’s important to ensure you’re getting the best rate on your purchases and sales. If you’re buying from an overseas supplier, it’s even more critical that you maximize profits by paying in the right currency. You can do this by understanding how to pay international suppliers and setting up payment options that work best for your business.
Here’s everything you need to know about making sure your money goes as far as possible when doing business internationally:
Understand The Various Ways To Pay International Suppliers
There are many ways to pay international suppliers. You can do so in the following ways:
- Bank transfer
- Online banking
- Letter of Credit
- Cashier’s Check
- Money Order
- Bank Drafts
In addition, there are other options, such as wire transfers, cryptocurrency, or even a corporate card. You can also utilize a foreign exchange provider if you have a large order to place.
Bitcoin, Ethereum, Litecoin, Ripple, Dash, Monero and Zcash are just a few of the more popular cryptocurrencies that have become increasingly common in international business transactions. Each currency has unique features and characteristics when compared to other payment methods available today. Do some research about these and see what works best for your business.
Keep Up With The Exchange Rate
You’ve probably heard the term “exchange rate” before, but what exactly is it? The exchange rate is simply the price of one currency in terms of another. In other words, the amount you get when you convert a given amount of one currency into another is dictated by an exchange rate.
So why should we even care about something as seemingly trivial as this? Well, there are many reasons why having an understanding of the current exchange rates between multiple currencies can have a significant impact on your profits. Some of them include:
- It keeps you abreast of changes in the exchange rate.
- It helps with your budgeting.
- It makes your costing more manageable.
- It helps you to maximize your profits.
Now that you know a thing or two about the exchange rate, here are some common ways of making paying international suppliers:
Paying With A Card
Whether you’re buying from a foreign business or an individual on an online platform, using a credit card is one of the easiest ways to pay internationally. It’s unlikely that you’ll be charged any additional fees aside from your regular interest rate, but if you are, they’re usually pretty small amounts.
If you don’t want to put all of the money upfront for purchase, using your bank’s debit card may be an option as well—but there’s always some risk involved when making payments with plastic since most transactions aren’t reversible if something goes wrong.
Making A Wire Transfer
The fastest way to transfer funds to another country is through an international wire transfer. This is a service offered by a bank to transfer money to an international bank account electronically. Wire transfers typically take 24 to 48 hours. You can move thousands to another country through wire transfers from the comfort of your home or office. What’s more? Your money can be converted into different currencies at your request.
Doing A Bank Transfer
Bank transfers are the most common and reliable way to pay international suppliers in your country, although they can also be used for international payments. They’re the cheapest, fastest, and most secure method, but they could take longer than wire transfers. Bank transfers are safer than most other payment methods because they don’t require you to share any personal information with your supplier. All they need is your bank account information and a routing number.
Using Online Banking
Online banking gives you access to your banking facilities via the internet. You can use online banking or mobile banking apps for transfers between bank accounts in different countries. However, the downside to these methods is that they take longer than other forms of payment because they require confirmation by both parties before the funds are transferred.
Whatever method you choose, the bottom line is that you pay less in fees if you’re willing to negotiate a deal with your supplier. Here are some important things to remember:
- Don’t forget about the exchange rate when sending money overseas.
- Make sure you know what exchange rate applies to your transaction.
- Check out the extra banking charges.
- Work out how it will affect your bottom line.
With these tips, you are well on your way to maximizing your business’ global potential.