You are the CFO of your company and you have just started working with a supplier based in China. One of your responsibilities would be to find the best way to transfer money internationally. What are some factors for consideration?
In this article, we have compiled 5 key factors to think about when making a cross-border remittance.
1. Foreign Exchange Rate
The exchange rate often forms the biggest portion of the overall cost of your remittance. Unlike transfer fees, the exchange rate is more volatile and fluctuates greatly. An unfavorable exchange rate can make the transaction more costly, since you need to top-up the difference between the amount your recipient is supposed to receive (mid-market exchange rate) and the actual amount received (exchange rate charged by your bank/service provider). This issue exacerbated if you are sending huge amounts for each payment.
This should be the first factor that you consider, especially because it forms the main bulk of the costs for international transactions.
2. Transfer Fee
All service providers will charge you for the cost of using their services to send your money abroad. It is important to find out exactly how much you can expect to be charged for your transfer. Transparency is critical to make a good decision.
3. Currency Corridors
Some providers are more equipped for transfers between particular countries (known as currency corridors) and can offer much faster transfer times and others. This is often true for established providers as they often have currency corridors where they can provide better rates and faster delivery.
4. Customer support
Good customer support is essential when you are dealing with remittance transfers. You need to know that you will be supported if you encounter any technical issues. Transfer delays, unexpected fees do happen to the best of providers. If that happens, it is always comforting to know that your provider can be reached quickly for prompt assistance.
5. Ease of setting up an account
The procedures for setting up an account to do cross-border money transfer varies. The complexity will differ between different providers. As above customer support is essential to help walk you through the process of setting up an account.
These are some factors to consider when finding the best way to make a cross-border remittance. Every company would have different priorities in determining what is the best way to make a cross-border remittance. It is important to list them down and compare them to remittance companies in the market.