18th December 2023 6 minutes

Managing international supply-chain payments

Learn how to manage international supply-chain payments in our latest guide. From navigating FX fees and minimising costs to streamlining your processes with a 3S Money multi-currency account, we cover it all.
Managing international supply-chain payments

The manufacturer’s guide to managing international supply-chain payments

When we talk about supply chains, we’re referring to the network of companies and individuals that make up the production and delivery of certain goods or services. This includes vendors, warehouses, retailers and much more. 
 
The industries that heavily rely on supply chains include (but are not exclusive to) manufacturing, technology, energy, automobiles, transportation, food and beverages. For businesses transacting across borders, an efficient supply chain with easy payment processes is particularly important for operations to run smoothly. We'll focus on the manufacturing industry in this guide.

 

Why is making payments to international suppliers challenging?

 

The supply chain payment process is generally similar across the board, but businesses often face a few common pain points. They are:
 
  • Unclear and expensive FX/transaction fees
  • Zero transparency around payment status
  • Unpredictable payment settling times
 

Factors businesses should consider for efficient supply chain payments

Being able to send and receive supply chain payments is vital for globally-trading businesses. 
 
Understanding the risks associated with global payments and how to mitigate them is equally important.
 
Let’s look at the criteria you should consider when making payments:

 

1. Payments should be timely and efficient 

 

It’s generally advised to pay suppliers on time for a clean process. Late payments can be a nightmare for all parties involved, but sometimes they do happen. Take the UK’s Gov Facilities Services Limited, for example. Researchers at gov.uk found that between October 2022 and March 2023, 21.1 days was the average time it took for a business invoice to be paid
 
Over 80% of invoices were paid within 30 days, while 8% were settled well over a month after their due dates (in 61 days or more).  Late payments can cause issues for all parties involved, such as:
 
  • Delays in delivery 
  • Disruptions to the supplier’s cash flow and business
  • Damage to key relationships 

3S Money tips:

 

1. Look for a banking provider that can send tracked payments. This makes it a lot easier to monitor your global payments. E.g. SWIFT GPI.
 
2. Look for a banking provider that offers dedicated customer support. That way, for those transactions that need assistance, you can jump on a call to understand what’s happening. Ask your banking provider what payment rails they use to transfer your money. Understanding how your payments are made is hugely beneficial when it comes to effectively planning your payment strategy.

2. Safety and security

 

Cyber risk is a worldwide threat, meaning that both domestic and international supply chain payments are exposed to the dangers of it. It's also become evident that since the Covid-19 pandemic, the threat is even larger. So much so that president of the European Central Bank and former head of the IMF, Christine Lagarde, warned that a cyberattack could trigger a “serious financial crisis”. 
 
As the world of payments continues to evolve and new financial technologies develop, it's even more important to ensure your payments and funds are safe and protected. 3S Money is regulated by the FCS, DFSA and CSSF, which means any of our business account clients making supply chain payments can be confident that their funds are safe.

 

General tips for more secure business payments

 
Here are five things businesses can do to ensure supply chain payments are safe and secure:
  1. Provide employees with regular security training 
  2. Always adhere to compliance rules and regulations
  3. Ensure sensitive data is protected
  4. Only accept secure forms of payment
  5. Choose a secure payment provider
 

3. Foreign exchange (FX) issues

 

Any business making international payments or dealing with multiple currencies is exposed to foreign exchange (FX) risk – including businesses making supply chain payments.

 

What is FX risk?

 

FX risk refers to any financial losses an international transaction may incur due to currency fluctuations.

For context, currency movements are unpredictable, and fluctuations can occur due to a wide range of geopolitical events. This unpredictability means your profits and margins can change depending on what happens with the global currencies you deal with. In some cases, the impact of FX can be huge.

For example, a report published by Kyriba at the start of 2023, revealed that European businesses incurred around $4.03 billion in foreign exchange-related losses

When making supply chain payments, FX is an essential factor to consider, which is why 3S Money has an expert FX desk on hand to assist with all client queries. Read more about how FX rates can impact business.

3S Money tips:

 

1. Find a client relationship manager that understands your business and works for you. A closer relationship means that your client manager can prepare for your regular payments with the FX currencies you need in advance and advise on FX rates.
 
2. Ask your banking provider about the payment rails they use to transfer your money. Understanding how your payments are made is hugely beneficial when effectively planning your payment strategy as the payment rail you're on will determine how quickly your payment can reach its destination.
 
3. Look into API integrations with your financial infrastructure. 3S Money's AutoFX allows companies to automatically place orders once money is received from a customer, saving money as well as manual processes.

Bank fees

Next on the list is bank fees. Traditional business banks often charge a transaction fee on top of each international transaction. UK banks, for example, charge between £20 and £40 per international transfer. For an enterprise-level business with regular outgoing payments, fees like this can eat away at your margins.

SWIFT transfer fees are also important to consider, as SWIFT payments can cost up to $25 per transfer, depending on your provider. Thankfully, with a 3S Money business account, SWIFT transfers cost only $1 (or your local equivalent) to send and $0 to receive.

 

What international payment methods are available?

There are several methods and networks available when it comes to making international supply chain payments. These methods can vary from country to country; for example, in Germany, the point-of-sale (POS) payment method, Girocard (formerly EC card), is exclusively available. 
 
However, throughout the globe, there are common international payment methods that most businesses can use to make payments. These include:
 
  • Bank transfers: 
    Traditional bank transfers are a common method for international payments. However, they can be slow, sometimes taking up to five working days. They can also be expensive, involving high currency conversion fees.
     
  • Wire transfers:
    Wire transfers are a faster way to send funds internationally but may also come with high fees and hidden costs.
     
  • International money transfer specialists: 
    This payment method allows the recipient to decide how to receive the money.
     
  • Online multi-currency accounts: 
    Multicurrency payment options are suitable for businesses trading in foreign markets.
     
  • Supply chain finance:
    This is where a supplier sends an invoice that can be paid by a third-party finance provider (instead of the client). This can also be done earlier than the payment due date. Once the supplier receives payment, the client would then pay the finance provider the invoiced sum.
     

Optimise your international supply chain payments with 3S Money

There are a host of benefits that come with choosing a 3S Money account for your international supply chain payments. Some of those include:
 
  • Security:
    As mentioned, 3S Money is regulated by global regulatory bodies such as the FCA, CSSF, DFSA.
     
  • Multi-currency business accounts:
    Allowing you to hold and manage funds in multiple currencies, making international payments much easier.
     
  • Efficiency:
    3S Money uses faster payments for quick and same-day international payments. There are also no transaction limits.
     
  • Low transaction fees:
    $1 SWIFT international transfers.
     
  • Global reach:
    Access to 65+ currencies in over 190 countries across the world.
     
  • API capabilities:
    Link your company's accounting, payroll, ecommerce and marketplace apps directly to your 3S Money account.
     

Opening a 3S Money business account is easy, it only takes four simple steps:
 

  1. Check your availability 
    Our express online application allows you to be pre-approved in less than fifteen minutes.
     
  2. Create an account
    Complete the application and create your account. Make sure you provide the correct proof of ID, such as your EU identity card.
     
  3. We’ll be in touch
    Next, you’ll hear from our sales team via a welcome call or email.
     
  4. Confirmation
    Once we’ve completed our final compliance checks, you’ll be up and running – ready to send and receive cross-border payments in no time.
 

Start sending international supply chain payments with a 3S Money account

Ready to make fast, secure supply chain payments? Join the thousands of customers already utilising 3S Money for international payments. Open an account today.

Meet the authors

Sharyh Murray

Author

Sharyh is the lead Content Writer at 3S Money with a strong background in crafting high-quality, compelling fintech and FX-related articles. With extensive expertise in the field, Sharyh's writing resonates with a variety of audiences and drives action among readers, whatever the financial topic.

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