If you're an Australian business owner making regular payments to suppliers overseas or sending large one-time transactions, doing extra research can save you a small fortune.
With a weak Australian dollar, you need to find an FX specialist to help hedge your currency exposure and manage international payments.
Banks are a convenient option but they struggle to compete with FX specialists like TorFX and OFX. The big four banks offer relatively weak exchange rates and expensive transfer fees.
Compare international business money transfer services
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Does your business need to transfer money internationally?
Here are the most common reasons for making a business transfer:
Paying a supplier or vendor
Paying international contractors or employees
Paying commercial bills
Business payments for online sellers
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 multi-currency account 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.
Best for: Businesses looking to work with multiple currencies and accounts in multiple countries, all in one place.
International payroll services
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.
Best for: Paying your borderless employees without dealing with local tax laws and payroll regulations.
Bank transfer
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 $30 for an outgoing wire transfer.
Best for: Paying vendors that only accept wire transfers.
Mail a cheque
Failing all other methods, you can mail a cheque. Doing so comes with quite a few drawbacks, including comparatively lacklustre security and slow delivery times. Cheques are being phased out in Australia so this won't be an option for much longer.
Best for: Times when no other option is available.
How to find the right money transfer service for your business
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 easiest choice. In truth, international money transfers are no longer a game for legacy banks. Newer companies and online money transfer providers undercut the competition to earn your business and will usually deliver your money to recipients faster than banks.
Take a closer look at the following areas:
Exchange rates. You may see a great exchange rate advertised but you need to make sure that is the rate you will receive. The mid-market exchange rate is the best rate you can get – it's the rate at which banks buy and sell a currency. However, many banks and money transfer services add a markup to the exchange rate. This can make a huge difference if you're sending large transfers abroad.
Fees. While it might seem that there are no fees to pay, it's likely that the exchange rate will have a large margin added to it. Your business transfer might be free but how much is a weak exchange rate costing you?
Discounts. Many services waive transfer fees when you send above a certain amount. If you send more than $10,000, OFX waives the transfer fee.
Forward contracts and limit orders. Find out what FX tools are available from providers such as forward contracts or limit orders. Forward contracts allow you to lock in an appealing exchange rate for future transfers while limit orders allow you to wait until your desired rate is hit.
Transfer methods. Money transfer services today support a range of payment and transfer methods. Some providers might allow payment through PayID and POLi while others may not.
Let's crunch the numbers: Sending a $5,000 business money transfer to the US
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 Oct 2024.
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
Better value and faster
Slower and more expensive
Even with the money transfer company charging a higher fee, a bank is still slower and more expensive when paying a supplier in the US. If you went with the money transfer service, your recipient will get an extra US$100 thanks to stronger exchange rates and lower fees.
How can I receive international payments?
How you set up to receive funds is going to depend on what type of service you select. Banks are likely to give you the option to open the account and get started in person, while a dedicated money transfer service will have less 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 an half hour to get through the entire application. Make sure you have your personal details and business information ready before you start filling out the application.
If you do a significant amount of business in another country, it can be useful to open up an account with one of the local banks. An international bank account can lower certain costs and make managing invoicing and payments easier.
By sending invoices out in local currency, you let your payee know exactly what's due – they don't risk coming up short because of hidden conversion fees. You can also hold incoming funds in the foreign bank account until the exchange rates improve before transferring them back to Australia.
Do I pay taxes on international business transactions?
Income from abroad is still taxable in Australia. Also be aware of any international tax laws that may 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.
What are the hidden costs of an international business transfer?
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:
Poor exchange rates. When dealing with popular currencies, you might get a great exchange rate from a provider. However, that same provider might add higher margins to the exchange rate on exotic currencies. Find a business money transfer service that offers strong rates on the currencies you use the most.
High fees. Is there a flat fee for your business transfer or a percentage of the total amount? And do you have to pay to receive a business transfer from overseas? Depending on the nature of your business and how you operate, you may want to compare flat fees against variable fees to find the most cost-effective option.
Transfer delivery speeds. Business transfers can usually be delivered within 1-5 business days. If you want your transfer to arrive sooner, then you'll pay for a faster turnaround. While instant and same-day transfers are available with some services, you could pay more for these options.
Bottom line
While there's no one perfect product for making international business payments, knowing some basic information can help avoid getting ripped off. 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.
Frequently asked questions
Are the application requirements different for businesses than for individuals?
If you wish to send money internationally on behalf of your business, you will need to register your business details for the account. This includes the business name and registered address, the ABN, ACN or ARBN number, details of the company directors, owners and/or shareholders and a description of what the business does. You will also need to register a bank account that is in the same name as the business.
Are international money transfers safe?
Yes, international money transfers are safe. The Australian Securities and Investments Commission (ASIC) regulates money transfer providers in Australia in the same way it does traditional banks. The money transfer providers operate under a financial licence, which you should be able to check via the provider's website.
Is it cheaper to send funds overseas through my bank or a money transfer provider?
It is typically cheaper to send funds through a money transfer provider due to better exchange rates and lower fees.
How do I track my business transfer?
Your provider or bank will give you a tracking number so you can monitor the progress of your transaction. For more information on tracking your transfer and what to do if it goes missing, check out this guide.
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To make sure you get accurate and helpful information, this guide has been reviewed by Justine Mclean, a member of Finder's Editorial Review Board.
Rosie Russell is a money transfers producer at Finder. She is on a mission to make personal finance easier to understand. Rosie has a Bachelor of Communication (Journalism) and Bachelor of Arts in International Studies from the University of Technology Sydney. See full bio
If you’re a borderless company, it's worth taking a look at Wise’s new product for businesses.
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