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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 for your business to make international payments to help you get back to work quicker.
There might be a number of reasons why your business needs to transfer money overseas. Here are the most common:
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 such as banks.
Many specialist money transfer specialists also offer forward contracts, limit orders and recurring transfers to save you time and money.
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 Wise. 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.
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.
A bank-to-bank wire transfer may be the most familiar and well-tread 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. Typically, banks like Westpac and NAB can charge upwards of $50 for an outgoing wire transfer.
Send wire transfers through money transfer companies to save money
Failing all other methods, you can mail a check. Doing so comes with quite a few drawbacks, including comparatively lacklustre security and slow delivery times.
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 and most obvious option when sending money overseas. In truth, international money transfers are no longer a game for only tried-and-true players such as banks. Newer companies and online money transfer providers promise to undercut the competition to earn your business and will usually deliver your money to recipients faster than banks can.
Take a closer look at the following areas to find the best money transfer service for your business:
Let's say you need to send $5,000 to a supplier in the US. Here's what you might face as far as fees and exchange rates as of 30 September 2021.
| Money transfer service | Major Australian bank transfer | |
|---|---|---|
| Fee | 23.18 AUD | 10 AUD |
| Exchange rate | 1 AUD = 0.7194USD | 1 AUD = 0.698405 USD |
| Transfer speed | Same day | 3-5 days |
| Amount received | USD 3,580 | USD 3,485 |
| Verdict |
|
|
Even with the money transfer service charging a higher fee, the bank option is both slower and more expensive when paying a supplier in the US. If you went with the money transfer service, not only would your recipient get the money faster, they'd also get an extra US$100 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 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 likely also have the option of opening an account over the phone or online.
The process is a bit more involved for business accounts, so set aside at least a half 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.
Income from abroad is still taxable in Australia. 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 guidance and regulations can be confusing for businesses with foreign income, you'll likely want to seek out a business accountant to make sure everything is above board. Some international business payment solutions like FlyWire can also help you manage your business taxes.
When sending a business money transfer, you may be quoted one fee on top of the amount you want to send. But if you look closer or ask for a breakdown of this fee, it could relate to a number of hidden fees relating to the following:
While there's no one perfect product for making international business payments, 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.
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