Many small businesses operate globally; they sell to international customers, source from global suppliers, and pay remote teams overseas. International expansion is also a powerful growth driver for small businesses and corporations alike.
While the growth opportunity is global, international payments can often feel complex, costly, and overwhelming. Without the right tools, they can easily become a frustrating bottleneck for small business owners.
What are cross-border payments?
Cross-border payments are financial transactions between a payer and a recipient in different countries. They typically involve navigating foreign exchange (FX), currency conversions, different banking systems, and regulatory frameworks.
What is FX?
Foreign exchange, often referred to as FX, refers to the global marketplace where different currencies are traded. Small businesses use FX to facilitate international trade, manage costs, and optimize cash flow.
For example, businesses shipping to international customers need to exchange currencies to receive payments. Or, when purchasing from foreign suppliers in a different currency, it can be helpful to understand how rates fluctuate and how to manage currency risk.
How do international payments work?
Increasingly, small businesses are embracing global business-to-business (B2B) payments. The cross-border payments market for small businesses is forecast to grow by 54% to reach $21.2 trillion in 2032.
Here’s how an international payment flows for a small business:
- Initiation: You request to send money in a foreign currency.
- Currency exchange: You (or your provider) convert your local currency (e.g.., US dollars) into the target currency (e.g., euros).
- Transfer process: The funds are routed through banks, payment networks, or local clearing systems.
- Settlement: The recipient receives the funds in their local bank account.
It might sound simple, but behind the scenes, this process involves understanding exchange rates, dealing with intermediary banks, paying fees, and ensuring your payments are compliant. All of that adds cost and time, a luxury most small business owners don’t have when they’re first scaling across borders.
Cross-border payment challenges for small businesses
Making timely, accurate domestic payments can be difficult enough when juggling all the moving parts of a small business. That challenge can increase exponentially once a business starts bringing in partners and customers from other nations with different currencies and regulations.
Some of the main cross-border challenges for small businesses include:
- Unpredictable FX rates: Currency values can shift rapidly, affecting how much a business can pay or receive.
- Hidden fees: Intermediary banks often deduct fees along the payment path and they’re not always visible upfront.
- Slow transfers: International bank transfers can take up to a week or more, especially if multiple banks are involved.
- Compliance and regulations: Different countries have different rules for disclosures, taxes, and anti-fraud laws.
- Lack of transparency: It’s often hard to track money, conversion costs, and timelines.
Easy global B2B payments for small businesses
Expanding globally might seem daunting, but what if cross-border payments were simple and cost-effective? With the right knowledge and the right partner, your small business can scale confidently beyond borders
Here’s a checklist to help get started:
1. Know your needs: Are you receiving money from customers, paying vendors, or managing a global payroll? Each use case has different requirements.
2. Choose the right currencies: Determine which currencies you’ll need to transact in. Common currencies include: USD (United States), EUR (European Union), GBP (United Kingdom), CAD (Canada), AUD (Australia), JPY (Japan) and INR (India).
3. Pick a payment partner: Instead of relying on your local bank and wire transfers, choose a dedicated cross-border payment provider, such as Convera, that offers better FX rates, transparent fees, faster settlements, and regulatory expertise.
4. Set up a business account: With Convera, a small business can open a cross-border business account and begin sending or receiving payments in more than 140 currencies to over 200 countries and territories.
Convera simplifies cross-border B2B payments for small businesses by offering an intuitive online platform that includes quick quotes, real-time tracking, and customizable dashboards. With same-day settlements, competitive FX rates in real time, no sign-up or monthly fees, and cost-effective international B2B payment options, Convera provides a speedy and reliable solution for small businesses looking to grow globally.
Whether you’re looking to streamline supplier payments or get paid faster by international clients, Convera can help simplify cross-border payments so you can focus on what you do best — running your business.
