As businesses look for new growth opportunities, expanding internationally is an obvious consideration. Selling to international customers is one thing and getting paid is entirely another. Almost 9 out of 10 finance professionals we surveyed pointed to the difficulties involved with collecting cross-border payments from business customers as an impediment to their international growth.
With that in mind, we put together a B2B cross-border payments checklist, giving a quick view of some of the core payment capabilities any business needs to have when serving customers internationally. Without them, you may find it very difficult to get paid. With them, your entire receivables process will be a lot easier, and your business will be a lot more efficient.
1. Functionality to invoice in local language and currencies
Don’t leave it to your international customers to figure out how to translate your invoices – when it comes to language and currency. Invoicing in U.S. dollars to their local currency and leaving the burden on the customer to figure out the correct payment amount while taking into account FX rates and hidden transaction fees isn’t great customer service. It can frustrate customers, and create a number of headaches for your finance team left to do the same financial translation with those payments.
There are also a number of regional and local regulations and laws guiding what exactly your invoice must look like and how it has to be delivered. In some cases, it must be translated into the local language. You also need to ensure the correct documentation is sent by the payer for U.S. tax purposes. Your cross-border payment solution should automate these things for you.
2. Convenient local payment methods and currencies
Your customers also expect local options when it comes to how they pay your invoices. As such, it’s essential to work with a provider that understands and offers preferred methods for each country. What is the easiest way for your customer to pay and for you to reconcile that payment? While some B2B payment methods may closely mirror those in the U.S., many countries have different payment method preferences.
It is also important to be able to receive payment in a timely and accurate manner. Having cash tied up overseas is not ideal, nor are short payments due to dynamic FX rates and hidden fees. Your solution needs to ensure a transparent and cost-effective transaction for both parties.
3. FX risk mitigation
How will you mitigate FX risk associated with your global customers? There are many complexities and internal capacities needed to manage global financial transactions, especially in today’s economic environment. Aside from the financial exposure to your business, shifts in FX rates can make it difficult for your customers to pay you the correct amount. Make sure your solution helps protect you and your customers from those shifts.
4. Local tax and compliance laws
Every country is different – creating a lot of complexity for finance teams trying to manage compliance alone. For example:
- Taxes – Some of the most appealing markets for international expansion have the most tax complexity, e.g., Brazil, India, Mexico. European countries such as Italy and Croatia are no different.
- Regional restrictions –Laws and regulations that impact payments can change fast. This can create hurdles for some payment processors and providers who may not be familiar with the complexities involved in processing payments there.
- Statutory and regulatory compliance – Picking a provider that has the highest level of security certifications and more is among the most important considerations. You need to align data privacy and data security practices with regional and country-specific regulations and frameworks and ensure that any third-parties you work with are also in compliance. For example, GDPR regulations in the UK and Europe require much stricter controls of how personal data can be stored, used and shared. Penalties for non-compliance are severe. There are also SOC 2 and PCI DSS requirements.
Your solution should automatically account for these things on a country-by-country basis —so you don't have to.
5. Local, around-the-clock and multi-lingual support
When you have international customers, you may field bill- and payments-related questions from customers in different languages and time zones. The more geographies you move into, the more complex and time-consuming answering these questions can get. Most businesses don’t have the resources or expertise to take this on themselves. Nor should they. The quality of support - especially when it comes to refunds and chargebacks – is a hugely overlooked part of choosing the right payments software provider. Make sure your solution provider can do this for you.
6. Ease of integration
Investing in a payments solution shouldn’t put you in a spot where you’re now working in two separate systems - and still forced to manually upload information into your system of record. Your international payment solution has to do more than just collect payments and track money flows. It should also integrate easily with your existing enterprise applications and workflows. This enables you to automate the sharing of payment information back and forth, simplifying reconciliation and providing everyone involved with up-to-date status on accounts.
7. Expertise managing high-stakes payments in complex, highly regulated environments
Different payment solutions are designed for different types of applications. For example, payment processors specialize in low value, high-volume transactions; think internet and retail-based businesses. The focus is on speed. If a payment goes awry, it can typically be corrected quickly without any undue impact to the business or their customer. Other solutions (like Flywire) are purpose-built to manage lower-volume, higher-value payments—from thousands to hundreds of thousands of dollars.
Almost every payment in B2B is “high stakes.” If a payment is not sent and received in a timely manner, it can have a big negative impact for both buyers and sellers, e.g., delaying orders, tying up credit lines, and slowing cash flow. This is especially relevant with international B2B payments where fluid FX rates, bank fees, and complex country-specific regulations can create a host of problems.
If you are selling to other businesses, look for a solution provider with experience managing these types of high-stakes payments. Otherwise you risk frustrating customers, delaying receivables, and creating a lot of unnecessary inefficiency and cost for all involved.