Editor’s Note: This is our second post in our series on international receivables. Read our first post on the common pitfalls and check back later this week for more.
There’s nothing worse than waiting on a payment from a customer, not knowing where it is or if you’ll ever actually even see the funds you are due.
In our first blog in our series on receivables, we looked at the basics of receiving money from international customers and where things can go wrong. In this post, we’ll dive into ways to decrease the time it takes to receive a payment and improve cash flow.
Why do traditional international payments take so long?
With the traditional banking system, requesting payment from an international customer can look a lot like this: The billing company sends an invoice electronically through an unsecured network. The customer sees that amount requested is in the billing company’s local currency and has to go to their bank to figure out how to send the correct amount – either in their local currency or pay to exchange the funds before they’re sent. This alone can take days, and that’s not including the time the customer might wait to process the invoice through their accounts payable department.
Meanwhile, the billing company is waiting on cash for a product or service possibly already delivered.
Once the customer makes the payments and depending on the country and route to transfer the funds, the payment could take up to a week to make its way into the receiving account.
Then, as we discussed in the first part of this series, the final amount deposited might not match the amount billed. This means your accounts receivable team now needs to investigate what happened – time and money not well spent.
A results-oriented solution
There are faster ways to receive money internationally, like through a service such as TransferMate Global Payments. The Irish fintech is one of the world’s leading B2B international payments firms, with more than a decade of experience helping businesses with their international expansion through cutting-edge technology and a unique global payments footprint.
With a service like TransferMate – which is part-owned by ING, Europe’s 5th largest bank – companies can reduce the time it takes to receive a payment (Days Sales Outstanding or DSO), and save time on reconciling payment amounts that don’t match up. Once the payment is requested, the paying customer simply sends their payment to TransferMate in their local currency, and TransferMate transfers the funds to the billing company in their local currency in their country. The payment is often received the same day or the next day.
Getting payments faster can mean a lot to businesses, especially during times of financial uncertainty. By using TransferMate, billing companies are making it easier for their customers to pay. This alone saves them time trying to figure out how to make an international payment. Then, the speed of the TransferMate service ensures that the billing company is not waiting a week without the cash it needs.
Billing companies can also upload a mass amount of invoices at once and request payment from multiple customers in multiple currencies. Paying companies can do the same, sending one amount to TransferMate to cover payments in multiple currencies in multiple countries.
The time savings…in more ways than one
With receivables through TransferMate, companies can save on average 9 minutes of administration time for each payment received by eliminating reconciliation. For a company receiving 100 payments a month, that can equate to 25 admin days per year.
Reducing wait times for international payments can be one of the best things to do in order to improve cash flow. In the next blog post of our receivables series, we’ll look at our tech offering that can scale this process and help manage invoices at the same time.