Going Global

Advances in technology, European convergence and favourable exchange rates are encouraging a growing number of UK businesses to develop relationships with their foreign counterparts. As a result, understanding the methods and options available for making and receiving international payments has never been so important.

So what are the potential pitfalls we should be aware of when sending money overseas?

Firstly, a shocking statistic: approximately 30% of all international payments made through banks go wrong. That's millions of pounds worth of payments failing to arrive on time or at the right place – risking any repeat business, affecting the bottom line and possibly damaging reputations irreparably.

THE SWIFT NETWORK

Whilst we all know that humans aren't infallible, the majority of payment mistakes are, on some level, caused by technology. Regardless of the method you use to help process your international payments, be it a bank or a specialist FX (foreign exchange) provider, the Swift Network sits at the heart of all international transactions.

Whilst the Swift Network itself is robust and effective, an international payment also has to pass through the infrastructure at either end of the transaction and this is only as effective as the weakest link in the system – if one link fails the whole payment stalls. In other words, the Swift Network is connecting to each country's domestic bank system, and some of those operate more smoothly than others.

Many countries, particularly those in emerging economies, rely on antiquated banking systems, consequently running a higher risk of payments going astray. It is worth checking with your FX provider about the robustness of the banking systems in the destination country before sending large sums of money into a potential abyss.

In some countries it is often safer to send a bank draft because the postal network is more resilient than the banking network – and you can stop a draft should anything go wrong.

IF THINGS GO WRONG…

You should also check if your supplier will chase up the payment if things go wrong and if they will guarantee to find the missing funds for you as part of their service, without charging you interest or extortionate fees.

Typically, recovering funds sent by wire via a bank can take up to six weeks – a staggering amount of time when you consider the knock-on effects of a delay in payment to others in the supply chain and to your cash flow. Severe late payment can even lead to insolvency in the worst cases.

International payments can't be handled on a one-size-fits-all basis. Select a FX specialist, ideally a global supplier, who can give you the flexibility to choose the most appropriate method of payment – an international draft or international wire, for example – and who can advise you on the best method of payment, tailored to suit your particular payment needs.

With the right FX provider, receiving and paying funds around the world, in different currencies, can be just as safe and simple as making a domestic payment.