Mike Massaro, CEO of Flywire, believes that in our quickly digitizing and global economy, cross-border payments are key to business success. In The Connected Economy’s Power Source – CEO Edition, Massaro breaks down what can hamper expansion and how digital tools can aid progress.
Payments are the lifeblood of any business. The ability to receive payments on time and process them efficiently impacts almost everything a business does — from credit and investment to hiring, developing new products and services, and expanding into new markets. For many businesses today, the opportunity to expand internationally is very compelling. Access to new markets and customers can accelerate growth exponentially.
Yet, even as economies have become more global, something seemingly as simple as getting paid by international customers remains complex and costly for businesses and their customers, and can hamper expansion plans in many ways:
- Traditional international wire and bank transfers can be slow, costly and difficult to reconcile for businesses and their customers.
- Unpredictable processing times for international payments hurt cash flow.
- Hidden fees and unpredictable FX rates cut into projected profits.
- A lack of transparency creates short payments and manual processing errors, increasing operational costs and hurting customer satisfaction.
- Country-specific regulatory restrictions and AML considerations add extra complexity and costs.
- The time and cost required to set up international financial relationships in each country can distract from the core business.
The technology sector is just one example. In a January 2021 research report published by PYMNTS, U.S. tech companies doing business internationally reported spending nearly 3 percent of annual sales on payment processing costs and payment operations alone. In addition to these high costs, tech businesses also reported big challenges with payment fraud and the ability to manage inbound international payments. Other industries reported similar costs and challenges.
Businesses looking to expand their sales efforts internationally must consider the far-reaching impact payments can have on their success. Modern digital payment tools can simplify the ability to process payments from around the world while dramatically streamlining operations for both the business and their customers, as shown in these examples:
- End-to-end automation and visibility, from payment through receipt, resolves cash-flow issues and streamlines reconciliation.
- Seamless integration with existing enterprise systems and workflows eliminates manual work and speeds up processing time.
- Support for multiple payment methods and currencies gives customers important and differentiating choices and increases satisfaction.
- Protection from currency fluctuation reduces risk and enables big cost savings.
- Robust regulatory, compliance and security infrastructure, including AML, protects businesses from unnecessary complexities.
There are many aspects to consider when deciding whether to expand internationally, and something as simple as how you will get paid is a bigger deal than most realize. Take into account all sides of the payment equation – including how customers will be invoiced, what currency they will pay you in and how you will reconcile those payments upon receipt. It’s all connected, and can have an important impact on your success.