Save money when sending an international money transfer to pay overseas invoices for your business.
Thanks to the global connectedness of modern technology, Australian businesses are now able to operate far beyond our national borders. Whether sourcing stock from overseas suppliers, buying commercial premises in other countries or simply paying overseas staff, there are more reasons than ever before why an Australian business might need to send money overseas.
A TorFX currency expert can help you pay your overseas invoice
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|1 USD =||1.0000||1.3668 Inverse: 0.7316||1.3060 Inverse: 0.7657||0.8733 Inverse: 1.1450||6.8746 Inverse: 0.1455||0.7842 Inverse: 1.2752||69.7950 Inverse: 0.0143||18.8935 Inverse: 0.0529||53.2950 Inverse: 0.0188|
|1 AUD =||0.7316 Inverse: 1.3668||1.0000||0.9555 Inverse: 1.0466||0.6390 Inverse: 1.5651||5.0297 Inverse: 0.1988||0.5737 Inverse: 1.7429||51.0645 Inverse: 0.0196||13.8232 Inverse: 0.0723||38.9925 Inverse: 0.0256|
|1 EUR =||1.1450 Inverse: 0.8733||1.5651 Inverse: 0.6390||1.4954 Inverse: 0.6687||1.0000||7.8717 Inverse: 0.1270||0.8979 Inverse: 1.1137||79.9187 Inverse: 0.0125||21.6340 Inverse: 0.0462||61.0253 Inverse: 0.0164|
|1 GBP =||1.2752 Inverse: 0.7842||1.7429 Inverse: 0.5737||1.6654 Inverse: 0.6005||1.1137 Inverse: 0.8979||8.7664 Inverse: 0.1141||1.0000||89.0027 Inverse: 0.0112||24.0930 Inverse: 0.0415||67.9618 Inverse: 0.0147|
As an accounts payable officer, it’s your job to make sure those invoices are paid on time and in full. But did you know that by using an online money transfer company rather than your bank to send money overseas, you could provide a big boost to your business’s bottom line? Read on to find out how.
Why might an accounts payable officer need to send money overseas?
As the accounts payable officer, it’s your responsibility to ensure that all of the company’s bills are paid on time. This includes checking that invoice amounts are accurate and bills are paid in full, both for invoices issued from Australia and from overseas.
With this in mind, you might need to send money overseas to:
- Purchase inventory or stock from an overseas supplier
- Pay overseas legal fees
- Pay for professional services for your business, for example accountancy or IT consultancy
- Purchase an overseas commercial property
- Pay overseas staff
- Pay any other outstanding business debts
How can international money transfers help?
When sending money overseas, most businesses simply call on their usual bank to handle the transfer. This makes perfectly reasonable sense at first – after all, if you already have an account set up it’s a quick and convenient option – but could actually be costing your business a substantial amount of money.
Why? Because banks take more than their fair share of your money before sending it overseas. The next time you ask your bank to send an international transfer, take a closer look at the exchange rate they quote you – it’ll be a whole lot lower than the mid-market (or interbank) exchange rate you see quoted on financial news broadcasts.
This is because banks add a sizable margin on top of foreign currency before selling it on to you. For example, while your bank might get 0.74 US dollars (USD) for every 1 Australian dollar (AUD) when they purchase American currency, it will then sell the currency on to you at a rate of 0.71 USD for every 1 AUD. As a result, you get poor value for money and end up paying a whole lot more than you should.
However, there is a more affordable way to send money overseas. Recent years have seen the emergence of several online money transfer companies. These providers, including companies like OFX, CurrencyFair and WorldFirst, specialise in international transfers. Because they have smaller overheads and their margins are tighter, they can usually offer exchange rates that are much closer to the interbank rate.
Their transfer fees are also quite competitive, with some companies even waiving fees altogether on large transfer amounts. With this in mind, it’s essential that you compare a range of transfer providers to find the best deal before sending money overseas.
Case study: Finding the best exchange rate when sending money overseas
Bianca is the accounts payable officer for an Australian publishing company. She needs to send GBP£10,000 to the United Kingdom to pay an invoice received from a UK accounting firm.
In the past, Bianca has always sent the money overseas directly from the company’s normal business banking account with a “Big Four” bank. However, with the company in a transition phase and looking to cut costs wherever possible, Bianca is keen to find a better deal. She compares the cost of sending money overseas using her bank with the cost of sending the funds via an online transfer company to see which provides the best value for money.
As you can see in the table below, Bianca can save a massive $907.63 for the company simply by using an online transfer company instead of her bank. Even though the difference in exchange rates might seem relatively small on paper, once you calculate the total cost of the transaction (and include the transfer fee) it has a significant effect on the overall cost.
That’s why it’s essential to shop around before sending an international money transfer for your business.
|Bank||Online money transfer company|
|Exchange rate||1 AUD = 0.5496 GBP||1 AUD = 0.5786 GBP|
|AUD needed to send GBP£10,000||$18,195.05||$17,287.42|
How to compare and choose international transfer providers
There are several factors you need to consider when searching for the best international transfer provider to help you pay overseas invoices, including:
- Exchange rates. The case study above shows just how important the exchange rate is to the total cost of a transfer. Look around for the company that regularly offers the best exchange rates for wherever you need to send money.
- Transfer fees. The transaction fee charged by the transfer provider can also have a big impact on whether or not you get value for money. Compare fees between providers and remember that some companies won’t charge any fees if you’re sending a large transfer.
- Supported currencies. Before choosing a provider, make sure it offers support for all the foreign currencies in which you need to send payments. Some companies will only support a handful of major currencies while others will allow you to transfer a much broader range.
- Transfer time. It’s crucial that all company bills are paid on time, so make sure to check how long it will take for any money you send to arrive in your recipient’s bank account.
- Recurring payments. Does the provider allow you to save time by setting up a recurring payment schedule to help you pay regular bills? If so, is there any additional fee attached?
- Transfer options. Some companies allow you to place forward contracts, where you lock in an exchange rate now for a future transaction, or specify the exchange rate you want with a limit order. Both of these flexible transfer tools can be used to take advantage of even bigger savings for your business.
- Customer support. If you ever need help with a transaction, will you be able to enjoy quick and easy access to customer support? Having a personal account manager you can contact for tailored advice and to handle any sensitive transactions could also be beneficial.
The next time you need to pay an overseas account for your business, make sure to compare your transfer options. The savings you find could make a huge difference to the cost of doing business.