By Frances Coppola
For companies doing business abroad, concerns with cash are amplified by foreign exchange risk. Your customers like to time payment for goods and services to suit their own cash flow schedule, but you may have up-front costs to meet. If you insist on payment in advance, you may lose business to other companies that are more willing to offer credit: but if you provide trade credit, you may have to borrow funds to cover cash flow shortfalls, and you face the risk of bad debts.
If you invoice customers in their own currencies, you may incur losses from exchange rate fluctuations between the date of the order and the date of settlement. If you invoice in your own currency, you may find customers delay payments to take advantage of exchange rate movements, creating cash flow uncertainty for your business. FX International Payment platforms facilitating international money transfers can help business manage this delicate balance.
Are there better ways of managing your cash flow, International money transfers and Forex-related transactions?
Traditionally, customers have paid for goods and services with bank drafts or cheques. But paper-based solutions like these involve time-consuming and inefficient manual processing. Moving your payments infrastructure online can give you significant savings in speed, cost and reliability and reduce errors in your international money transfers.
Online international payment platforms often come with the benefit of live currency rates so you don't have to call around for the most favorable terms. Making those comparisons on the Web can be much easier.
In terms of international money transfer, manual processing can take considerable staff resources as well as take some time to clear. There's often a need to send faxes back and forth, and to physically provide and receive cheques from the bank.
Electronic transactions enable you to receive secure payments in the form of direct international money transfers to your bank account. If your business processes a large volume of Incoming Payments, major payment providers may offer your customers the ability to integrate payment details with accounting or ERP software so that the transaction data can simply be uploaded and processed in bulk. That can result in significant administrative efficiencies for both the payer and recipient of funds.
In today’s world of fast electronic transactions, it’s likely that the majority of your incoming payments would be online money transfers direct to your bank. But you might also accept debit cards, pre-paid cards or credit cards. These have been around for a while, but card suppliers are introducing innovative developments that are making them easier and cheaper for businesses to accept.
For example, FX International Payment's AccessLine lets customers pay with their eligible American Express Business Credit Card transparently to the supplier. The supplier receives an immediate international money transfer, while the customer benefits from up to 51 days interest-free credit. This can reduce cash flow risk for your business while meeting your customers’ need for flexible payment options.
With comprehensive reporting of daily cash movements from a good payments platform, you can bring your cash flow management online, potentially giving you better control of your day-to-day cash position and reducing the need for manual reconciliation. If your business processes a large volume of incoming international money transfers, major payment providers may offer your customers the ability to integrate payment details with accounting or ERP software so that transaction data can be uploaded and processed in bulk. This can result in significant administrative efficiencies for both the payer and recipient of funds.
Managing incoming foreign payments online can provide you with opportunities to mitigate your foreign exchange risks. For example, you can use Incoming Forward Contracts to manage your business’s exposure to movements in exchange rates. With a clear view of foreign currency movements on a daily basis, you may also be able to time outgoing payments to offset incoming ones, potentially reducing your overall FX exposures.
Balancing your needs and those of your customers can be tricky. Technology can help you manage cash flow and FX risks more effectively while providing a wide range of customer payment options.
With 17 years experience in the financial industry, Frances is a highly regarded writer and speaker on banking, finance and economics. She writes regularly for the Financial Times, Forbes and a range of financial industry publications. Her writing has been featured in The Economist, the New York Times and the Wall Street Journal. She is a frequent commentator on TV, radio and online news media including the BBC and RT TV.
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