They must take payments from e-commerce customers based almost anywhere; or they have to pay suppliers spread throughout global supply chains; they may even have employees in foreign markets. Managing these relationships can become a real headache for Financial Directors. How do you ensure payments end up in the right place, safely and securely, with good governance and oversight, without compromising on cost and efficiency?
The good news is that competition amongst companies offering international payment services is increasingly fierce. However, tread carefully. While many foreign exchange specialists market their payment services, often focusing very narrowly on the issue of currency rates, they may lack the functionality and experience to solve FDs’ problems.
Navigating your way through the process of choosing an international payments provider can therefore be a minefield. To help you avoid getting caught out, think about the international payments issues that worry you most. These six questions will help you find the provider best-placed to rise to your challenges:
1. How can you give my finance department complete visibility of our business’s international payments?
Many FDs no longer have oversight of all the international payments their business is managing. Supplier payments may be handled by procurement, for example, while e-commerce could be run by digital marketing. That can make it very difficult for finance to stay on top of the figures.
A good international payments provider should be able to help you confront this challenge, offering a single platform that provides complete visibility of all international payments going in and out of the business. Such providers do more than simply facilitate the payments process; they help FDs get a better handle on their businesses’ finances.
2. How will your solutions integrate with my business’s systems and help us become more efficient?
The best payments providers will help you move away from manual processes and work with you to automate your international payments with mass payment processing – while still ensuring robust validation and authentication procedures and providing the option to process individual or ad hoc payments. They’ll certainly be able to offer integration tools such as bulk file uploads that reduce the need for data entry. Tools that integrate with your business’s systems – through API connectivity or ERP software integration, for example – can be hugely powerful.
If a potential international payments provider doesn’t offer this sort of functionality, think carefully about moving forward with it; as your business scales, manual processes will become even more time-consuming and expensive, so it’s worth getting this right now. The best providers can also help you upgrade your own systems and processes, working with you to get the best out of new technologies.
3. What do you know about local regulation in the countries we must deal with?
The truth is that international payments can be complicated. Different countries have different requirements and regulations, meaning you have to navigate a huge assortment of regulatory set-up and deal with local partners whose requirements vary too. Even in a single country, the rules may be different if, say, you’re paying an individual or employee, compared to settling a bill with a supplier.
Payments providers without genuine experience and expertise in the markets that you must deal with – including new markets you may have future dealings with – could cause you all sorts of problems. When payments go astray, they can take months to resolve, potentially souring your relationships with customers, suppliers or even employees.
4. How can I be confident about the costs you’re quoting?
Foreign exchange companies often market their services on price – every FD fields a constant stream of calls from brokers claiming they can offer a better exchange rate than incumbent providers.
Smart FDs don’t fall for these claims. They recognise that the rates quoted may be temporary or obscure other charges and fees. They’re concerned about the lack of transparency at a number of providers. Any international payments provider that cannot set out all its costs completely openly – and explain how long these costs will apply for – should be avoided.
5. What can you tell me about virtual bank accounts?
For businesses making regular payments in overseas currencies, a bank account denominated in that currency can be very useful. However, while dollar and euro accounts are widely available in the UK, many banks don’t offer any more than that.
Your payments provider should be able to help with this. Client-named virtual bank accounts with unique IBANs can be a neat way to get round the issue of your bank not offering an account in the currency you need – but not all international payments providers offer this service.
6. What is your business’s pedigree in helping companies like ours with international payments?
While there are a number of international payments providers with very high levels of brand awareness - some are household names – they may not be the right option for your business’s individual needs.
It certainly makes sense to deal only with well-established businesses that have a strong track record in the sector but look for a provider with genuine expertise and experience in helping businesses like yours with international payments. Who are their existing clients, what do these customers say about them, and how have they helped these customers with similar challenges to those you face? Do they have the balance sheet strength to give you confidence in their credibility?