Roughly $54.3 Billion USD worth of UK goods were imported to the United States in 2016. The two countries have a booming and important trade relationship. But when American small businesses try to send money to the UK for import goods, international wire transfers between the two countries flow through an antiquated, cumbersome and costly international banking infrastructure.
Veem is here to help small businesses to transfer money around the globe more simply and cost effectively. Here are a few key things to consider when sending money to the UK for import goods.
The UK Advantage: Variety
The five most popular UK exports only make up just over 40% of all UK exports: hardware at 14.7%, vehicles (12.6%), pharmaceuticals (8%), gems and precious metals (6.7%), and electrical equipment (6.6%). Which means the other 60% of UK exports is made up of a wide variety of goods including polymers, foodstuffs, textiles, sports equipment, furniture and much more. For the 44,000 US small businesses who import from the UK, this means access to a lot of unique and differentiated goods.
The UK Challenge: Regulations, Complexity
Regulations set forth by the Financial Conduit Authority, with the involvement of the Bank of England and Financial Regulations Authority, can make sending money to the UK through traditional bank wires confusing. Anti-terrorist funding and anti-money laundering laws put the onus on businesses engaging in cross-border payments to understand and monitor their trading partners’ business activities. They are also required to report suspicious activity. Failure to comply with regulation can put your business and your supplier’s business at risk of running into trouble with HM Revenue and Customs (HMRS).
How a traditional bank transfer from the US to the UK works
When transferring money to the UK through traditional bank to bank transfers, you can expect to provide:
- The name of the payer (their business) and the payer’s address (where their headquarters are located)
- The receiver’s name and address (likely provided on an invoice)
- The receiver’s bank and bank address (typically, this must be requested/obtained)
- The receiver’s bank account number
- The receiver’s bank’s SWIFT code
Once all information is collected and by the sender’s bank, US dollars are converted into British Pounds or Euros (at least for the time being), and then sent through a US clearinghouse.
The US clearinghouse charges the bank a fee to arrange payment to the receiver’s UK bank’s clearinghouse. If the UK bank deals with a different clearing house than the one through which the US clearinghouse is trying to negotiate the payment, then a correspondent bank is involved, again at a cost. Once the correspondent bank receives the money, it is processed through to the receiving bank, minus the charges incurred by all the middlemen along the way.
Making payments for import from the UK can be daunting. The Veem international payments platform not only lets you skip the middlemen charges, our simple interface lets lets you track your payments in real time, every step of the way.
For US small businesses new to the importing process from the UK, here are some additiona resources worth investigating before you get started: