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 to make an international business transfer so you can get back to work quicker.
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Does your business need to move money internationally?
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.
International money transfers for business
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.
Best for: Businesses looking to send quick, cost-effective payments and benefit from additional money-saving features.
Business payments for online sellers
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.
Best for: Businesses looking to work with multiple currencies and accounts in multiple countries, all in one place.
A bank-to-bank wire transfer may be the most familiar and well-trodden 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. Some banks charge up to £25, for example, while some money transfer services don’t charge a fee at all.
Best for: Paying vendors that only accept wire transfers.
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.
Best for: Paying your borderless employees without dealing with local tax laws and payroll regulations.
Send a cheque
Failing all other methods, you can mail a cheque. Doing so comes with quite a few drawbacks, including comparatively lacklustre security and slow delivery times. You might also run into low maximum amounts for international money orders.
Best for: Times when no other option is available.
Why should I compare my options beyond my bank?
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 crunch the numbers: Sending a £10,000 business transfer to India
Let’s say you need to send £10,000 to a supplier in India. Here’s what you might face as far as fees and exchange rates as of 8 August 2020.
Money transfer service
Major UK bank transfer
£20 + additional correspondent bank fees
1 GBP = 97.08 INR
1 GBP = 95.77 INR
Better value and faster
Slower and more expensive
The bank option is both slower and more expensive when paying your supplier in India. If you went with the money transfer service, not only would your recipient get the money faster, they’d also get an extra INR 3,227 thanks to stronger exchange rates and lower fees.
Banks may seem like the more convenient option, but once you set up an account with a money transfer company you can send money with a few clicks.
How can I receive international payments?
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 fewer physical locations. You’ll probably 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 half an 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.
When you do a significant amount of business in another country, it can be useful to open up an account with one of the local banks. An international bank account can lower certain costs and make managing invoicing and payments easier.
By sending invoices out in local currency, you can let your payee know exactly what’s due and they don’t risk coming up short because of hidden conversion fees. You can also hold the funds in the international bank account until advantageous exchange rates arise before transferring them back to the UK.
Several payment acceptance services allow you to get paid by credit card. By using a full-service program like Flywire, you can get both payment processing and invoicing solutions, which includes the ability to accept credit cards.
You can also look into setting up with providers that are a little less hands-on like Skrill or Stripe. With these types of payment acceptance services, you’ll need to do a bit more work when it comes to invoicing.
Do I pay taxes on an international business transfer?
Income from abroad is still taxable in the UK. Also 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 an international business transfer, 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.
Frequently asked questions
Can I monitor the progress of my funds?
Nearly all money transfer services provide a unique transaction ID that you can use to check the status of your funds. In most cases, you can do this online or by phone.
How safe is a money transfer?
When processed through a reputable bank or money transfer provider, your funds are safely tracked until in the hands of your recipient.
Can I set up regular payments?
Yes, many banks and transfer companies offer the convenience of recurring transfers.
Rhys Subitch is a writer and editor at Finder who tackles topics across the site. With half a decade of experience researching, editing and writing for a Fortune 500 company, university and several independent publications, Rhys brings readers the most up-to-date and curated info on all things finance.
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