International money transfer resources

International business to business payments

Article by Mozo

It could be that you’re starting a new online business or expanding your existing business and for the first time you’ll need to make regular business to business (B2B) international payments to a supplier, contractor or possibly even staff in an overseas office. 

Whenever you are exchanging one currency to another you will want to limit your exchange rate risk and keep bank fees and charges to a minimum. Afterall, every extra cent you pay in fees or FX margins, means less profit for your business.

There are a number of options for making international payments to overseas businesses and which option you choose will largely depend on how frequent and how large your transactions are. Some of the options available for B2B transfers include:

  • Business credit card
  • Online bank transfer or wire transfer
  • Foreign currency account  

Business credit card

For small or irregular payments to an overseas vendor or supplier you might be able to make a payment via a business credit card.

Just remember that with credit card purchases, you’ll usually pay a foreign exchange margin of around 3% on top of the AUD purchase amount and you won’t be able to lock in the exchange rate in advance, you’ll be charged at the exchange rate determined by your bank at the time of the credit card transaction.

Online bank transfer   

There are several ways that you can make an online transfer to an overseas bank account. If your business bank account has online banking, it’s likely that you’ll be able to make direct payments to an international bank account from your computer or mobile the same way you make ordinary online payments. 

Generally though, the amount you will able to transfer with this method will be subject to daily withdrawal limits that you have set up on the bank account. The exchange rate that you will get for your transaction will be locked in at the time of the transfer and you will also pay a transfer fee per transaction.      

An alternative to using your business bank account to make overseas payments is to go through a specialist foreign exchange provider or International Money Transfer specialist. Generally these providers offer businesses more competitive exchange rates and lower transfer fees than major banks in Australia.

In most instances, you’ll be able to transfer money directly via the provider’s online portal - you set up an account, transfer your AUD to this account, they convert your AUD into your currency of choice and deposit the funds into your recipient's bank account.

Specialist international money transfer providers often have a broader range of product options available for businesses that need to transfer money internationally on a regular basis. Options will include:

  • Spot rate transfers. This type of transfer is the most common. You get the ‘spot rate’, which is the exchange rate that the currency is trading at on that day and time.
  • Forward contract. This allows you to lock in a rate at today’s rate, for a point some time in the future, sometimes up to 2 years in advance. Say for instance, your business makes an international order which is due for payment in 90 days. But you’re concerned that if the exchange rates moves too far against you this will significantly impact your cash flow. With a forward contract, you can lock in today’s rate and pay the invoice in 90 days knowing your exact cost for transferring the funds.
  • Limit order. This might be a suitable option if you are transferring funds to a company bank account in a foreign country where the timing isn’t important but the exchange rate is. A limit order allows you to set the exchange rate at which you want your transfer to take place. For instance, you might only want to transfer money to the US when the exchange rate reaches 0.70 cents.   
  • Regular payments. As a business, it’s likely that you’ll need to make regular payments to international suppliers or staff. Many IMT providers have products similar to foreign currency accounts (outlined below) that will help you to reduce the cost of regular transfers and limit your exposure to currency fluctuations.  

To find out which providers offer international money transfer services for businesses, head over to our business transfers page. Here you’ll find a list of providers, exchange rates and fees.

Foreign Currency Account

If you’re a business with offices in numerous countries around the world, another option that many of the major international banks like Citibank, HSBC, ANZ and Westpac will have available is a foreign currency account. This means that you can transact in a range of currencies easily and manage your international cash flow effectively from Australia.

Comparing business transfer providers  - what to look for.

If you are dealing in international currencies, of course one of the most important factors as a business is ensuring you get the most competitive exchange rate for your transactions. Just be aware that there isn’t one best provider for every currency but there will be a provider that has the best rate for the currency or currencies that you’ll need to transfer to.

Mozo’s handy market snapshot comparison table helps you compare at a glance and see the provider that has the best rates for the currency you need to exchange. Exchange rates on our site are updated hourly so you can be sure you are getting as close to the live rate as possible.  

In addition to the exchange rate, other factors that might play a role in your decision are:

Transfer speed. Some providers are able to transfer money more quickly to one currency than another. So if you need to send pounds you might find that provider A can do a same day transfer but provider B will need 3 business days. Generally speaking, the time for major currencies is usually between 1 - 3 business days, more exotic currencies can take longer.

Transfer fees. Most banks and IMT providers will charge you a flat fee for each transfer. Online transfers are generally cheaper than over the phone or in branch transactions. Some international money transfer specialists don’t have fees for transfers over a set amount, so if you are transferring a large amount this is worth considering.

Transfer limits. Some providers will have minimum transfer requirements, whereas other providers will only transfer up to set maximums, and some don’t have any limits at all. The important thing is finding a provider or providers that will be able to serve the needs of your business on an ongoing basis.

Platform security. The IMT providers listed on our website transact millions of dollars annually and are regulated by ASIC here in Australia. IMT providers have secure payment technology to ensure your funds are transferred safely. It is up to you however to ensure that you provide the correct business name and bank account details for the recipient of your funds as they will not be liable if you transfer funds to a wrong account.

Want to see which providers are offering the most competitive exchange rates and the lowest fees for your next money transfer? Then compare IMT specialists side by side, in our comparison hub.

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