Timely, accurate vendor payments are the mainstay of any organization conducting business internationally, ensuring the company remains sustainable and productive in the long-term. Delivering products to you from all over the world, vendors must be able to rely on you to pay your invoices on time every time no matter their location. Without this, your reputation and trusted relationships with these key partners may be in jeopardy. Yet, faced with current global market volatility, the challenges associated with cross-border payments (even to mature markets) have intensified considerably. Not only must you ensure correct order delivery, while also taking into account each country’s tax regulations and payment routing rules, but you must now also navigate today’s tricky and often erratic foreign exchange rates.
At one time, balancing these factors would have been solely in your hands but, fortunately, with today’s technology innovations, there are solutions available to streamline your international payments process. Consider these challenges technology can help you address:
1. Navigating Regulatory Complexity
From tax IDs to purpose of payment to contact information and more, cross-border payments require the coordination of a considerable amount of complex information. This complexity is further compounded by the intricate and often obscure variations in the data each country demands. Frequently, the omission of even one of these key items from your routing details can equate to an incomplete payment. As a result, delays and investigations are inevitable, leaving invoices unpaid, your organization with substantial overhead and late payment costs, and your vendor relationships being damaged. Today, however, thanks to significant innovations in technology, the payments process can be refined to specify all the information you need to make a successful payment. Powerful payment solutions, when supported by expert compliance and operational teams, can now deliver real-time country-specific bank validation tools that identify in advance the fields you need to enter to execute timely payments in each country.
2. Reducing Manual Entry
With highly complex payment routing rules and regulatory requirements, comes equally complex data to enter. Even domestic transactions require AP departments to key-in significant amounts of convoluted information, inevitably resulting in a certain number of errors. Combine this with the need to navigate unique validation procedures for multiple different international banks and you have a recipe for disaster. Fortunately, a robust payment solution will directly integrate with your existing Enterprise Resource Planning (ERP) system to facilitate international vendor payments. You should have the flexibility to export a single file to process all payment types across multiple currencies and settlement accounts. In this way, a straight through process is established, substantially reducing the number of hours spent manually entering payments information and decreasing the number of errors incurred as well.
3. Mitigating Foreign Exchange Risk
With vendors across the globe, your organization will undoubtedly have encountered volatility in the foreign exchange market. As discussed in the opening to this article, operating overseas inevitably means that you will face market fluctuations at some point since monetary, economic, and socio-political issues affect currencies. Navigating through this volatility is a crucial factor in establishing the long-term profitability of your company. One key to achieving this is understanding the exposure in local currency well in advance of making any international payments and mitigating these exposures on a monthly, quarterly, or annual basis. While this is a complex aspect of finance, today’s technology can better prepare you to manage it, determining the best blend of solutions for your needs, such as a natural hedge of receivables and payables, purchasing portion at spot, and/or using hedging instruments like forward contracts. The right payments platform, coupled with a skilled operational team, should deliver visibility to forecast exposures, while also helping you to mitigate foreign exchange risk through a flexible risk management strategy. In addition, it should provide tools to integrate with your financial software to eliminate manual intervention upon execution of delivery.
Ultimately, working with the right technology will save you considerable time and money. Optimizing the efficiency of your organization’s cross-border payments process will help you consistently deliver timely, accurate payments. This means a reduction in late payment fees, more staff time to dedicate to other vital processes and a significant boost to your reputation with international vendors. When selecting a solution provider, make sure you look for a scalable platform, with powerful tools and robust banking partnerships to streamline your payments process. In the end, the real key to success is ensuring your solution provider has strong 24/7 customer support and complete compliance procedures in place. After all, should any issue arise, you must be able to rely on your provider’s dedicated customer service team and compliance experts to rapidly resolve the problem.
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