The other morning I had a project team meeting over chat with participants in New Jersey, New York, Nicaragua and Peru. In the past I’ve had teams with people from Brazil, Argentina, Thailand and even Belarus working together. Twenty years ago, this may have seemed completely out of the ordinary. Today, it’s typical.
According to the Bureau of the Census, U.S. companies bought over $394 billion of services from foreign companies last year, an increase of over $29 billion from 2009. The “other private services” category which includes business, professional and technical services was responsible for $8 billion of this increase. Despite all of these advances, there is one hurdle which remains rather cumbersome for small businesses: paying foreign vendors.
Why paying foreign vendors isn’t always easy
The international payments marketplace is mainly designed for large companies, making large transfers on a frequent and recurring basis. It’s not setup for John and Jane Smith who want to pay a designer in India $500 to build them a website; nor is it setup for the manufacturing company that wants to pay $1,500 to have its owner’s manuals translated into three languages. Using traditional methods, the cost of transferring funds can be prohibitive. Considering that wire transfers often incur both incoming and outgoing charges, the payment cost could reach 10-20 percent or more of your total transaction cost.
If you are a small business looking to work with foreign services providers and freelancers, here are some alternatives for you to consider (in alphabetical order):
American Express FX International Payments
American Express FX International Payments allows you to send foreign payments in U.S. dollars or in foreign currency to dozens of countries around the world. Once your FX account is setup, it is linked to your company’s bank account to deduct any payments sent. This eliminates the need to setup a separate account just for transfers. The service can handle large, frequent transfers or small, infrequent transfers. The foreign currency transaction fees are low at only $15 per transaction. It’s important to make sure before you begin the lengthy application process that the currencies you need are available. There are restrictions in this regard.
Want more tips on vendors? Check these stories out:
Non-resident alien bank account
Many foreign freelancers take on projects from U.S.-based companies as a source of savings. They have jobs with salaries that cover their expenses and see this additional work as a way to save – something that would be unobtainable otherwise. In order to help themselves and keep their savings in a stable country, they open bank accounts in the U.S. These “non-resident alien” accounts are permitted assuming the owner complies with banking and tax laws. Many foreign service providers with U.S. bank accounts also have a PayPal account. Therefore paying them is as easy as sending a PayPal payment to your neighbor across the street. If you plan to work on a long-term basis with a foreign vendor and other solutions don’t seem to work, you may suggest this to option to them.
Go to the article: Alternative Ways to Pay Foreign Vendors
