Business Money Transfer: Know Your Options
December 4, 2020
Business money transfers are part of everyday operations for most companies—but things can get tricky when that money needs to go overseas. It’s not uncommon for most companies to do business across borders—they have suppliers, contractors, vendors, customers, and partners in multiple countries. That global network is part of what drives success, but it can also create headaches—especially when it comes to business money transfers.
Getting people and organizations in different countries paid is still a practice fraught with obstacles. International money transfer for business comes with no shortage of hoops to jump through: exchange rates, fees, obfuscated transactions, and more. It puts many businesses in a precarious position with their international partners. If they don’t get these partners paid, it could mean disruptions for essential operations. You can’t sell widgets in Germany if your widget supplier in Vietnam didn’t get paid for their last shipment!
To make money transfer for businesses as easy and efficient as possible, global companies need to understand their options. Here’s a look at the most prominent, and what to expect from each when it comes to a business money transfer.
FX brokers handle international money transfer for businesses
There are many different international escrow services out there that can facilitate business money transfers between domestic and foreign bank accounts. They use the equivalent of a money order and serve as the middle-man for business transfers. These firms handle larger sums, which is why many businesses tend to use them to pay suppliers. While there are fees associated with these transactions, they’re typically very minor. Exchange rates also tend to be good, since foreign exchange (FX) is their primary business model.
The downside to working with an escrow service or international money transfer firm is that it’s a third-party—meaning there are inevitable fees. They’re also not ideal for smaller, frequent transfers, since those fees can add up fast. Timeline can also be an issue—funds may take 2-3 days on each end to clear escrow. You’ll also need an account with them, which isn’t an issue if you plan on sending money frequently.
FX brokers are ideal for moving large sums of money oversees regularly with minimal fees, even despite their longer transfer time.
High street services for business money transfers
High street transfer services like Western Union and MoneyGram can transfer money internationally without any need for an account. They’re great for one-time payments, when you don’t want to go through the trouble of setting up an account. They’re also fast—the transfer usually processes in 2-3 days. Many high street services also offer a choice of how to transfer money internationally: bank deposit, cash transfer, etc.
The primary issue with high street transfer services is their variability. Fees to send money vary depending on how much you’re sending, to what country, what the current exchange rate is, and more! And again, going through a third-party service means paying for convenience. You also don’t get the security that you would with a traditional bank transfer.
High street transfer services offer superior convenience and speed of transfer, if you don’t mind paying higher fees.
Bank wire for traditional business money transfer
Traditionally, the safest way to transfer money internationally to vendors, partners, suppliers, and other contacts in your business network is via bank-to-bank wire transfers. A reputable financial institution handles your transfer at all times and insured against fraud or loss. Wire transfers are also easy to arrange and most businesses already use them domestically, so they know what to expect. If you make regular, smaller transfers to vendors or suppliers, wire transfers are a great option.
The biggest problem with wire transfers for international funds transfer is the time it takes: 4-6 business days standard, and upwards of 7 in many cases. The fees associated with a bank-to-bank foreign transfer can also be prohibitive—for higher sums, you’re often better using an FX broker. Likewise, if it’s a one-time transfer to a partner abroad, high street services offer more convenience over a wire transfer.
Bank transfers are best for recurring overseas transfers of funds, so long as you have the time to wait for those funds to be securely exchanged.
Digital business money transfer service
Digital money transfer services like Veem have risen to prominence in recent years on a wave of fintech innovation. These platforms offer superior convenience for international business transfers, including speed, transparency, and optionality. Transfers only take a couple of days (but can be instant). Businesses can track their funds, since there is no middle-man or escrow. There are also options for sending in specific currencies and options for how recipients access the funds. Best of all, fintech innovation grows better with each passing year.
There aren’t many downsides to digital business transfer services like Veem, outside of the preference of many vendors to rely on traditional funds transfer channels. Even still many digital services make it easy for recipients to receive funds how they like—which means your business can still send money through a digital service.
For optimal control and flexibility in how you transfer funds internationally, few options are better than a digital money transfer service.
Understand money transfer for businesses
Regardless of which business money transfer service you choose, it’s imperative that funds get from your business to whoever they’re intended for, no matter where in the world they operate. Bottlenecks and barriers to international money transfer affect your business—everything from deteriorating partnerships to stunting business growth. When money moves freely, businesses thrive globally.