Expanding to reach international markets is surely the goal of almost every business. E-commerce and the internet make this simpler than it was in earlier decades; it could be that your business is dealing with international customers and clients almost from day one. The internet gives everyone access to a global marketplace and while this obviously brings a wealth of opportunities it also brings many challenges. Chief among them is the question of how to best process international payments.
Set out your terms and conditions clearly
It’s important that if you are selling globally you are ready to do business with your international customers. That means making the terms of any transaction clear to them from the outset. Whether you are selling a product or a service, you should have a contract in place that specifies the full amount you are charging, the payment methods and currencies accepted, and the amount of time in which they have to pay in full.
You might need to have individual arrangements with clients from different countries, and costs may vary accordingly. That is because you may need to take into account delivery, tax and handling fees. You should make it clear who is responsible for those from the outset. Different payment methods may also incur varying fees, as we shall see.
Wire transfers from one bank to another can incur significant fees that your customer may not be aware of. If they do not take those into account when paying you then you may not receive all that you should. Some banks offer free worldwide transfers to other accounts with the same bank, but this is something that practically can only be set up with individual clients.
International money transfers
Using a foreign exchange broker can save you up to 90% on bank fees and charges, especially with large amounts. Sites like this one can help you to find the best money transfer provider by selecting your destination and the country you’re transferring money from, and then finding the best currency exchange rates.
When choosing a provider be aware that those with low or non-existent fees often make their profit through hidden charges incorporated into the exchange rate itself, which, as a result, might be less attractive than other fee-charging providers. Which is the best deal for you will depend on what currencies you’re using and how much money is being sent or received.
If you regularly do business in a particular country, then you might consider opening a bank account there so that you can take payment in the local currency. Unless you can use that money to pay business expenses in that country you will still need to transfer the money back to your home account at some point.
Credit cards will incur a fee, usually a percentage of the amount spent, but the ease of use may make them a suitable choice for small payments. Likewise, international payment solutions like PayPal where fees may add up depending on the currency and the amount involved.
Whichever methods you choose, make sure you have a structure in place that serves both you and your customer. That way a healthy business relationship can develop.