How to Advise SMBs on International Payments
The reach of small businesses is increasingly global, in fact a recent survey found 46 percent intended to grow their international customers and 41 percent wanted to expand their global vendor relationships.
International growth offers increased opportunities for staff, clients, partnerships and larger vendor networks, but it’s not without its challenges. With international expansion comes international payments, as the right talent may require working with freelancers thousands of miles away and paying in foreign currencies.
The Challenges of International Business Payments
If you want to be your clients’ go-to source for bookkeeping and controllership services as they expand around the globe, you need to understand the common pitfalls of international payments and help your clients effectively and transparently handle them. Here are some of the top challenges presented by global business payments, plus tips on how to conquer them.
1. Lack of Controls and Balances
One of a bookkeeper’s primary jobs is to make sure that clients follow proper form and procedures when making payments. Keeping track of things like approvals and separation of duties can be complicated enough with domestic payments, but overseeing international payments invites more complexities.
International business payments take many forms, including wire transfers, credit cards and various payment apps and many of them fail to ensure or enforce controls and balances. While making payments may be simple, involving little more than a form or a click, that doesn’t mean payments are adequately reviewed, approved or tracked so they can be easily referenced later.
To help protect your clients, you need to make sure they’re using international payment methods that include review by all the proper parties, capturing comments and documentation and leaving an audit-ready trail at the end.
International payments have historically been inefficient. Your job is to make the process as efficient as possible for your clients. Duplicative tasks like filling out countless wire transfer forms or continually learning new platforms waste valuable time.
They also create the risk of costly payment errors, because redundant data entry opens the door to minor mistakes that cause significant problems. Using the same tools and processes for all your clients can go a long way toward boosting efficiency and reducing the potential for error.
Rather than learning new platforms or solutions for each client (for example different bank processes and portals), the better approach is to work with a single comprehensive digital payment solution across your client base that can handle both international and domestic payment needs. The right platform will use the same processes for all types of payments, allowing clients to authorize payments with a single click or tap.
You don’t want to waste your time trying to navigate clunky payment platforms and you shouldn’t ask your clients to do so either.
3. Hassles for Recipients
International payments present challenges for recipients as well as senders. Think of the amount of time it takes for an overseas vendor to get paid by check – your vendor must wait for you to transfer the money to your bank, wait for the funds to clear, wait for a check to be issued and then wait for it to be delivered overseas.
After all that, they must go to the bank, deposit the check, wait for it to clear and then wait for it to be converted into local currency and deposited in their account. The process can take weeks.
If you want to hold on to your valued international vendors and freelancers, international payments need to be as easy and quick as possible for them. The best way to accomplish that is to issue electronic payments that go directly into their accounts, eliminating the waiting game and making things far more convenient on the receiving end.
Want to make things even more convenient? Have your clients pay their overseas contacts in their local currencies, so they don’t have to deal with the currency exchange on their end.
4. After-the-Fact Bookkeeping
When you use bank-specific or multiple different payment platforms for international payments, you inevitably have to deal with after-the-fact reconciliation of your bookkeeping records. Even though there might be memos attached to payments, things aren’t always clear when it comes time for reconciliation.
Chasing down payment information and exchange rates is time-consuming and can easily lead to confusion and errors. When you switch to digital payments made from a centralized platform, most after-the-fact bookkeeping is eliminated from the international payments process.
A single platform that uses AP automation and integrates with bookkeeping solutions like QuickBooks and Xero streamlines the international payment process, giving you estimates when you enter the payment and final rates and descriptions when payments are processed, so there’s nothing to second-guess later.
5. Treading Water with Your Clients
You want your clients to see you as their trusted advisor, but you can only fill that role if you’re able to take a deep dive into their bookkeeping and financial data. If you rely on processes and technologies that are inefficient and time-consuming, you’ll be stuck treading water at the surface, cleaning up books and chasing down details rather than diving in and using your time to help your clients grow their businesses. Consolidating and integrating all your bookkeeping technologies into a single platform make it easy to show your clients the depth of value you can offer them.
The Answer to Better International Business Payments
Handling global and domestic payments from a single platform significantly reduces the international payment challenges that cause many businesses and bookkeepers to struggle. From the perspective of outsourced bookkeeping, using a unified platform allows you to scale work successfully. When everything is in one place and operates under the same workflow, you can boost efficiency across the board.
If you’re onboarding new staff, you can quickly get them up and running without having to reinvent the wheel for every client. For example, we use Bill.com for all payments both international and domestic. All staff is trained on it and the fact that it can convert to local currencies, enforce the separation of duties, sync with major bookkeeping software and create an automatic audit trail makes global payments incredibly efficient for the firm.
A unified payments platform also makes things more efficient for your clients. When they understand how the system and workflows function, who is involved and what goes into getting a payment made, they better understand their role in the process and appreciate the value of reviewing and approving payments on their end.
Using one digital business payments platform also reduces errors, because once vendor information is set up correctly the first time, there’s no need to enter the information again and risk having small mistakes derail payments. The entire process is perfected from start to finish, with greater visibility and control along the way. You also get the added benefits of accurate, real-time cash flow data thanks to platform syncing and automation, cheaper payments by eliminating wire transfer fees and faster, more secure payments than when you used paper checks.
When it comes to international payments, efficiency is in everyone’s best interest. Adopting digital international business payments through an integrated payment platform eliminates many of the common pitfalls of international payments and puts you in the best position to serve as a trusted advisor for your clients.
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Leslie Jorgensen, founder and CEO of Supporting Strategies, has been providing bookkeeping and operational support to small businesses since 1997, including development and implementation of support infrastructure for several startup organizations. Supporting Strategies has more than 400 team members and uses secure, best-of-breed technology...