Business
International Payments
The Complete Guide for Business
<br> This complete guide to international payments goes beyond the basics of international money transfers and cross border payments, supporting your understanding of the most efficient and cost-effective ways for your business to transfer money internationally. <br> <br> Download the guide to read later, or read on to understand the future of international payments. <br> <br>
Account Managed Service
In a world of constant market fluctuations and economic uncertainty, navigating currency risk is a critical challenge for businesses. With your own account manager, you can now cut through the noise and gain a competitive edge.
Powered by real-time data analysis from our insights team, your account manager provides unparalleled insights, helping you make informed decisions and optimise your international transactions. Say goodbye to costly surprises and hello to strategic currency risk management that empowers you to confidently navigate global markets with your own tailored approach.
Best of all knowing your account manager is there watching rates for you and your business circumstances, you can get back to doing what you do best - running your business.
Platform-Only International Payments
Introducing the ultimate platform for confident currency management - an international payment service that puts you in control. With our user-friendly platform, you can easily set your own target rates, empowering you to make international transactions with confidence.
Say goodbye to unpredictable exchange rates and hello to transparent, customizable currency purchases. Our cutting-edge technology and real-time market data enable you to seize opportunities and optimize your currency conversions with ease. Whether you're a savvy investor or a global business, our platform provides you with the tools to manage your currency risk with precision. Join us and experience a new level of control and convenience in your international payments, all at your fingertips.
Table of Contents
The Basics of International Payments
International Payments Glossary
Managing International Payments
International Payment Providers
What are international payments
Simply put, international payments, also known as cross-border payments, is sending or receiving payments from one country to another. This could be to pay a supplier or a bank, and normally involves two different currencies being exchanged - a foreign exchange, or FX.
Because the value of currencies fluctuate, there is a risk that the value of the international payment you are making or receiving will change. The main goal of making successful international payments for business is to limit your exchange rate risk and keep fees to a minimum.
Does your business run imports or exports, or buy goods overseas? According to the Office for National Statistics, whilst total import of goods increased by £2.0bn in November 2021, total exports of goods decreased by £0.3bn. Though markets continue to be impacted by Covid and global economic and political instabilities, both imports and exports are likely to have a strong recovery. Interestingly, imports from non-EU countries continue to be higher than EU - that is a lot of new currencies to think about for international payments.
Globalisation has created a world of opportunity for UK businesses. We now have access to international goods and labour, and the ability to sell to anyone, anytime, and anywhere. The trend of growing UK trade with global markets comes with risks and opportunities, not least negotiating volatile foreign exchange markets and outdated cross-border payment systems.
International payments glossary
We've already used a few acronyms in this international payments guide, so let’s quickly cover off the definitions of the key international payments terms. Understanding the language will be essential to gaining a fuller understanding of international payments and how they impact your business. The basics are below, or consult the complete financial markets and FX glossary.
FX
SWIFT
BIC
IBAN
SEPA
Routing Number
Correspondent Banks
Managing International Payments
International payment transactions can range from the small and mundane, to market-moving cross-border merger and acquisitions, and everything in between. International payments take place 24/5.5, from Monday morning in New Zealand, to Friday night in New York. The market tends to be cyclical in nature with trading volumes rising as the economy grows and contracting as economic activity declines.
To help you manage your international payments better, let's look at the journey your money will take. Every international payment in a business starts with somebody purchasing goods or services overseas.
Step 1
You buy a product
You have agreed to pay for a product or service in an international currency, requiring an international payment. Lets say you are in the UK, using £GBP and your product is in Germany costing €275,000.
Step 2
You choose an FX provider
You then choose your bank or an alternative FX provider. No matter which you choose for international payments, you must already have or open an account with them, requiring the usual identity checks.
Step 3
Get international payment details
To send an international payment, you need to get the details of where the supplier would like the international payment to end up. This will include an IBAN for cross-border payment within the SWIFT network.
Step 4
Instruct the international payment
You next instruct the FX provider or bank, how much you want to pay (€275,000 in this example) and where the money should go to in the international payments system.
Step 5
The international payment is calculated
Your international payment provider will do an FX calculation from euros to GBP based on the exchange rate they are offering when you instruct. Check if they add a margin (anything from 0.1% to a hefty 4%) and an international payment fee.
Step 6
You instruct the transaction
Once you have instructed the international payment provider how much to pay and who to pay, they will make the transaction on your behalf and you will need to settle the outstanding funds including margin and fee, normally within 2 days of the instruction.
Step 7
Intermediary institution
Once your international payment is in the system, the institution who sent it may use an intermediary or 'gateway' institution – this institution will settle all the payments on 'the back end' including administration of post trade settlement, and records of ownership.
Step 8
Beneficiary bank
The beneficiary bank will receive the international payment from the intermediary bank and credit the supplier’s bank account with the correct funds in Euros. There's still one more step to pay for your product.
Step 9
The international payment is received
Depending on the payment method, normally SEPA in this case as it’s going to Europe, the monies should be settled (received) in your suppliers account the next working day - you have paid for your product.
FX in more detail
When dealing with the purchase and sale of goods in foreign currency, the type of international payment transaction is also sometimes know as deliverable FX, this is compared to speculative FX which guesses where the value of currency will go. You can read all about the basics of FX in our article, What is FX?
How to reduce FX risk
Businesses which import and export products and supplies, are at risk of currency fluctuations which can affect business profitability. Businesses who deal in large or frequent international payments should consider the benefits of hedging their FX exposure. Hedging will [help insure your business] (/business/news/what-is-hedging)against the impact of a negative event on your bottom line.
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What to look for when choosing an international payments provider
When sending or receiving cross-border payments, you need to find the right provider for you. Payments must be simple, fast, cost-effective, and above all - secure. Traditionally, businesses make and receive international payments from their banks. But this can sometimes take longer, leaving you more open to changing exchange rate. You are also unlikely to have the personal service of an international payment expert. There are, however, a number of alternatives such as FX brokers and online specialists which can be cheaper than traditional banks.
As with any financial services company, do your research and use your best judgment. Even if you think your bank is the best, they can be a little more expensive. It’s worth considering an FX provider, but look out to see if they meet some of these criteria.
Competitive Rates
FCA-authorised
Safeguarded Funds
Online Tracking
Online Security
Account Manager
Managing Risk - Business Resources
How does Caxton’s international payment solution work?
Our customers say it best.
“ Caxton continues to help manage all of our international payments in a timely and cost-effective manner via their platform – a move that has made payments easier to facilitate and process. ”
“ Caxton limits our exposure to changes in the market. So, we’re able to sell internationally as well as actively manage our foreign exchange rate ”
“ Having one point of contact makes everything simpler – I don’t need to spend all of my time watching the markets, and can focus on growing my business. ”
“ Caxton really understood our business and payments model. Having the ability to pay suppliers and receive international payments on one platform has reduced time and costs. ”
The solution is ready
As someone who manages international payments, we know what’s important to you: simplicity, security, service, and keeping costs down. Let us help you to manage all of your local and global payments, in one platform, to keep track of international payments and keep costs down.
With Caxton’s FCA-authorised platform, you can manage all of your business payments, expenses, and currency accounts in one place. Controlled by you, supported by us. Our service is quick and secure, 24 hours a day, seven days a week - saving you time and money.
\You’ll get more for your money with Caxton. You can reach payees in over 195 countries and territories. Choose from 28 different currencies and exchange over 750 currency pairs. Enjoy excellent, real-time rates in multiple currencies when you send, receive, and exchange money.
Your dedicated business account manager will help you to safely negotiate the currency markets, to maximise value and minimise risk and help make sure you get every upload right first time. Plus, our platform interface interacts with your accountancy package via our high-tech API, to let you quickly reconcile and manage bulk transactions.
Get a quick demonstration
Optimise your international payment process. In just 30 minutes, you'll know if this solution meets your needs. Book an appointment or speak to an expert today on 0207 201 0554