When you need to purchase supplies, materials, or inventory from a vendor located in a foreign country, at some point you may need transfer money internationally.
Getting funds across borders can be cumbersome. There are usually several ways to pay, although they aren’t always the greatest options. In fact, quite a few of them will cost you more than you might expect.
How much does an international transfer cost?
It varies. At a bank in Canada, you’ll likely pay $25 to $100 for a wire transfer, depending on the country you are sending to. First, you’ll need to consider the method of transfer. A wire transfer has different fees than an international cheque. The exchange rate also plays a part. Most institutions charge beyond the mid-market rates, which means you’re paying a sort of “hidden” fee for the service.
This leaves most business owners asking another crucial question. How do you save money and lower fees on an international transfer of money? There are quite a few things you can do.
1. Look for the Best Exchange Rate for the International Transfer
The exchange rate is often accepted by business owners as the price of doing business in another country. Different institutions use different exchange rates. The rate itself can become a sort of “premium” you pay on the cost of the international transfer of money.
Shop around for the best exchange rate. You won’t be able to get the mid-market rates you’ll see advertised, but you can find more favourable rates. Banks usually don’t offer the most competitive rates, and big players in the payments industry may not offer you the best options either. Consider small banks or online banks. Also consider tracking exchange rates to make your transfer at the most favourable time.
2. Skip the Wire Transfer and International Cheque
Wire transfers, as mentioned, will run anywhere from $25 to $100 at most Canadian banks. Some charge a flat fee plus a percentage of the transfer amount. The long and short of it is you’re going to pay to send money. There may even be a fee at the other end of the transaction, which many vendors will request you cover as well.
International cheques may seem like a better option, but they too are costly.
3. Look for a Better Way to Pay
Technology has been changing the way international money transfers are handled. Instead of going to the bank for a pricey wire transfer, why not take a look at one of the many payables platforms available today?
Some of the leading platforms allow you to make payments to more than 130 different countries. They also let you make use of your credit card, which makes it easier than ever to pay suppliers and vendors from around the world.
Most of these platforms also offer better exchange rates. The leading platforms leverage their combined buying power to get the most competitive rates. Mobile apps mean you can pay anytime, anywhere as well.
4. Pay All at Once
If possible, request that the vendor allow lump sum payments to be remitted for all outstanding invoices. You will therefore only need to make a single transfer, reducing costs.
It’s easier than ever to send money abroad, just like it’s become easier to work with companies around the world. International payments don’t have to be as expensive as you might be led to believe. Use some or all of these tips to help cut costs and save money when you need to pay a vendor abroad.
The information in this article is for educational and information purposes only and should not be relied upon for decision making. Always seek the expertise of a professional advisor or accountant prior to making any decisions.