3 min read • November 6, 2017
In today’s global economy, it’s only a matter of time until you need to do business with an international company. While our business ecosystem has evolved to the point where businesses have customers and suppliers all around the world, our payment systems have not evolved to match. It can be confusing, time consuming, and labor-intensive to pay an international vendor and supplier. Thankfully, some new options are emerging. Find out how to pay an international vendor or supplier, and the different options you have.
Chances are, you have already agreed on pricing if you are thinking about making a payment. However, when you pay an international vendor or supplier, you will also need to agree on the currency. You will need to pay whatever currency is outlined on the invoice, and this is usually the supplier or vendor’s home currency. However, there could be situations where this you want to choose a different currency, or pay in your own home currency. Make sure you clarify the payment currency with the business you would like to pay, and that this is reflected on the invoice.
The most common way to pay international invoices is through bank wire transfers. However, banks charge extremely high fees for wires, and they do not provide competitive exchange rates. They also require you to make a trip to the physical bank branch and fill out paperwork, which is very time consuming. Credit unions are another option for sending international payments, and these institutions charge less than banks. There are also online payment providers that charge much less than banks, and also greatly reduce the manual effort required to make the payment. For instance, Plooto helps you make your payment online for competitive fees and rates, and it reconciles your international payments in your accounting software.
When you are comparing payment options, look at the following criteria:
Rank your needs, and evaluate the different providers to determine which one provides the features that matter most to you.
Depending on the payment option you choose, you will need different pieces of information. If you make your payment through the bank, you will need the following info from the business you wish to pay:
Making a payment through an online provider, you will likely only need the name and email address for the business you wish to pay. Once the recipient receives the email, they will enter their account details and money will be transferred.
The final step to making an overseas payment is to reconcile the payment in your accounting software. With most payment types, you will need to manually reconcile the payment as paid; however, some online payment providers will actually automatically do the reconciliation for you, which saves you time.
Whether you have an ongoing relationship with an overseas vendor or you are making a one-time payment, it is best to find a payment channel that offers the best pricing and convenience.