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Using an international money transfer service instead of your bank when paying international employees or invoices can save you both time and money. We break down the best ways for your business to make international payments to help you get back to work quicker.
Take a look at the ways you can make and request payments across borders to figure out which is best for your business. Many options are at your disposal, each with their own benefits.
Money transfer providers are specialists that can get your funds from A to B at a low cost. And they’ll likely hit your account — or the account of your supplier, contractor or employee — sooner than other options.
Many specialists also offer forward contracts, limit orders and recurring transfers to save you time and money.
For a service that goes beyond directly sending and receiving payments, a business payment account with a money transfer provider may better suit your business’s needs.
One such provider is TransferWise. Its Borderless program allows you to set up local bank accounts in up to 15 countries so you can pay and get paid as though you were local.
When you’re looking to pay your employees, you can potentially get everything handled by an international payroll service. It processes the entirety of your payroll and stays up to date on regulation changes so you don’t have to.
A bank-to-bank wire transfer may be the most familiar and well-tread path, but it may not be what’s best for your business. International wire transfers often come with steep transfer fees and poor exchange rates. Bank of America, for example, could cost up to $50 or more, while some money transfer services don’t charge a fee at all.
Failing all other methods, you can mail a cheque. Doing so comes with quite a few drawbacks, including comparatively lackluster security and slow delivery times.
You may also run into low maximum amounts for international money orders if you decide to use USPS.
For business owners, time can sometimes be more valuable than money. You may think that because it handles your other finances, your local bank is the simplest option when sending money overseas. In truth, international money transfers are no longer a game for only tried-and-true players like banks. Newer companies promise to undercut the competition to earn your business.
Let’s say you need to send $10,000 to a supplier in France. Here’s what you might face as far as fees and exchange rates as of August 1, 2020.
|Money transfer service||Major Canadian bank transfer|
|Fee||$0||$50 + additional correspondent bank fees|
|Exchange rate||1 CAD = 0.623 EUR||1 CAD = 0.610 EUR|
|Transfer speed||Same day||2-5 days|
The bank option is both slower and more expensive when paying your supplier in France. If you went with the money transfer service, not only would your recipient get the money faster, you’d also save more than €160 thanks to stronger exchange rates and lower fees.
Banks may seem like the more convenient option, but once you get an account setup with a money transfer company you can send money with a few clicks.
How you set up to receive funds is going to depend on what type of service you go with. Banks are likely to give you the option to open the account and get started in-person, while a dedicated money transfer service will probably have less physical locations. You’ll likely also have the options of opening an account over the phone or online.
The process is a bit more involved for business accounts, so set aside at least a half-hour in most cases to get through the entire application. Make sure you have your personal details, business information and any relevant financial information you may need.
Income from abroad is still taxable in Canada. On top of the CRA’s regulations, be aware of any international tax laws that might apply — especially if you have an international bank account. While there are many treaties around the world to avoid double taxation, you may still be subject to additional taxes.
Because tax law is so involved, you’ll likely want to seek out a certified advisor to make sure everything is above board. Some international business payment solutions like FlyWire can also help you manage your business taxes.
While there’s no one perfect product for making international business payments, knowing how to evaluate solutions and find the best one for your business goes a long way. Compare international money transfer providers to get more details on the services they provide, how to better measure them against one another and what to do once you choose one.
Here’s what you need to know about international money orders and see if there is a better option for sending money overseas.
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