Should International Suppliers Be Paid in Their Domestic Currency or Your Own Currency?
When it comes to paying suppliers overseas, often a business will try to simplify invoicing by encouraging their overseas suppliers to provide pricing in their (the buyers) local currency. The assumption for many importers is that this is the best way to avoid adverse currency movement.
Example: US Importers
There’s no question that paying in your own currency i.e. US dollars, is the simple route for American-based importers, nonetheless being paid in dollars raises a number of potential threats or expenses to suppliers outside the US. The consumer ultimately picks-up the bill for the added risk by paying higher prices for goods and services. Through having the option to pay in the local currency as opposed to dollars, US traders can remove these risks for the supplier and the benefit of getting paid in dollars leads to more competitive prices for the goods / services in question.
From our research, TransferMate have seen clients save up to 10% by simply securing local currency pricing from suppliers. It is always a good exercise to simply ask your suppliers what those goods will cost if you are paying in their currency. Even if you have been buying goods from that supplier for a long time, if their domestic currency is now weaker than it was when you first agreed pricing, then there is an additional margin that you could be earning by simply pointing out that you are now in effect paying more and wish to also be given pricing in local currency.
Local Currency Payments
Paying international suppliers in their local currency is actually incredibly straightforward and it puts the importer in a far greater position in terms of price negotiating strength. Additionally, when it comes to sending international payments, a global broker like TransferMate can offer significantly better exchange rates than the bank every time, so your business saves money.
TransferMate compete directly with the bank in securing better exchange rates for businesses. Where a business would traditionally use their bank to send an international money transfer to a supplier overseas, our 24 hour online platform www.transfermate.com and 24 hour customer service desk allow clients to compare with their bank and see exactly how much more expensive it is to use the bank. At that stage clients are in a better position to decide which option to use to make their payments.
The currency you choose to pay will also be influenced by where those currencies are trending on the markets. While your business may be US based and paying suppliers in the UK in US dollars historically, the US dollar has strengthened significantly against sterling in the past year so it is entirely possible to contact suppliers and reprice based on the domestic currency.
How much could a business expect to save using TransferMate?
Recently, a major steel manufacturer based in Sydney, Australia was quoted AUD$34,621 to make a payment of USD$25,000 to a supplier in China.
A quick phone call to TransferMate saved the client $1,196 by securing better exchange rates and eliminating bank charges. Savings of up to 5% are possible however the easiest way to find out exactly how much you can save is compare live the next time you have a payment to make by phone or online.
About TransferMate
TransferMate Global Payments are regulated globally and use a network of global bank accounts in over 50 countries to collect payments in one country and pay out from a bank account in another, eliminating bank charges and speeding up payments.
TransferMate Global Payments is one of the world’s largest and well established currency settlement networks that provide companies with a 24 hour ‘plug and play’ API technology platform to send or receive cross border transfers globally at top speed, lowest cost via connected technology.
Companies globally can compare with their bank on www.transfermate.com