Reducing Business Costs When Trading Internationally
Trading internationally is a healthy sign. It means your brand has gained global recognition and has succeeded to the point where you can expand into overseas markets. However, it’s not a straightforward process. Doing business with foreign companies means finding solutions to little, niggly problems.
The best example is making payments. If you don’t have an account in the country, which most companies don’t, then you can expect to pay expensive fees. Every entrepreneur wants to eliminate them, yet it’s harder than it sounds. Thankfully, these tips should help you save on your international business costs.
Start A PayPal Account In A Different Currency
PayPal is the market leader for international payments, but it’s not ideal for businesses, not when the fees and exchange rates are relatively high. Therefore, a smart tactic is to open an account in the currency in which you receive the biggest payments. For example, if you do lots of business in Europe, you should pick the Euro. By doing this, you can transfer the money to your bank account and let your bank deal with the conversion. Usually, it’s better than PayPal. All you need is a swift code.
Collect Payments In A Multi-Currency Account
If trying to bend PayPal to your will is too time-consuming, you can forget about the wallet provider altogether. Yes, others offer services which you should find to be more accommodating. TransferWise is a prime example as it’s a multi-currency account that lets you receive international payments free of charge. How? By providing you with bank details for a host of countries, from the US and UK to Europe and Australia. As a result, you can get paid like a local even when you don’t live in the region. This technique is a lot less energy-sapping.
Pay In Their Currency
The flip side of international payments is sending the money. Whether you collect or send it, you’ll incur fees based on how your provider or bank has to convert the money. The good news is, Airwallex is different since it sends the money to suppliers in their currency. One of the main uses for the platform is to send money to China since it sends it in Chinese Yuan (CNY). You shouldn’t forget the other aspect of international payments because it’s as expensive to send as it is to receive. Thankfully, wallet businesses have your back. Take that, PayPal!
Forex hedging is complicated, but it’s proven to protect companies from exchange rate fluctuations. You can find more detailed information and advice here, yet the main thing to keep in mind is that you must protect a portion of your transaction. By hedging, you can prevent expensive losses if the value of your currency, or the currency of your partners, increases or decreases during the transaction. It’s not a money-making scheme; however, it is an extra layer of security in case something goes wrong.
Reducing payment fees when trading internationally is a must if you plan on making the most from your investment.