14 September 2023

Understanding B2B Cross-Border Payments

B2B cross-border payments can be a huge catalyst for growth and global outreach in business! We delve into the nuances of B2B cross-border payments and how you can streamline them for your business.
Understanding B2B Cross-Border Payments

Easy international transactions are more crucial than ever. Thankfully, with the rise of fintechs, digital banking solutions and electronic money institutions (EMIs) like 3S Money, businesses can now experience simple business-to-business (B2B) cross-border payments, enabling growth and global outreach. So, let's look at the ins and outs of B2B cross-border payments and, how businesses can streamline them for success.

 

The basics of B2B cross-border payments

B2B cross-border payments refer to transactions where goods, services, or funds are exchanged between businesses across international borders. In recent years, these transactions have become more efficient and straightforward thanks to the evolution of technology and banking solutions. 

 

Examples of B2B cross-border payments 

 

When it comes to B2B payments, there are several payment processes and systems out there that suit different business needs. Some examples are: 

  • Bank transfers: direct bank-to-bank fund transfers. 
  • Wire transfers: similar to above, but between international accounts.
  • Credit card payments: often used for smaller business transactions. 
  • International wire transfers: a quick method but sometimes involves higher fees. 
  • Payment gateways: digital platforms that process online payments. 

There are also SWIFT transfers (which are very similar to wire transfers). Most payment providers charge up to $25 for sending and receiving SWIFT payments. 3S Money, only charges $1 to send and $0 to receive SWIFT payments when you open an International Business Account.  

 

Which businesses are likely to make B2B cross-border payments? 

 

Cross-border payments are becoming more popular with businesses, showing no signs of slowing down anytime soon. According to the borderless payments report published by MasterCard, “58% of SMEs say they are sending and receiving more B2B cross-border payments now than before the pandemic” - a significant increase from 2020 when those numbers were only at 38%. 

There are three main types of businesses that use B2B cross-border payment processes. They are: 

  • Importers: businesses that buy goods or services from foreign entities. 
  • Exporters: those that sell goods or services to businesses in another country. 
  • Financial institutions: banks, fintechs, or payment gateways that facilitate the actual money transfer between buyer and seller.  

Whatever industry your business is in (whether you’re an eco-friendly clothing company, a travel agency or an international construction company) 3S Money’s business banking platform can facilitate and streamline your international business payments, helping you enter new global markets with ease.  Learn more about our B2B  cross border payment solutions.

 

The impact of exchange rates

 

It’s impossible to mention cross-border business payments without mentioning foreign currency exchange. Foreign exchange (FX) is often overlooked when it comes to B2B cross-border payments however, it plays a huge role in the final outcome of international transactions. This is mainly due to fluctuating currencies and their ability to determine the final amount received by the seller.   

65% of businesses we recently surveyed reported exchange rates are having an impact on their operations. Let’s take a deep dive into how exchange rates can really impact your cross-border business transactions. 

 

The cost of transactions 

 

Some payment providers charge fees on international business transactions, which can be costly for businesses. In addition to transaction fees, businesses can incur losses on cross-border payments due to fluctuating FX rates. For example, if a business wanted to exchange £50,000 into US dollars, with traditional bank fees, it could cost up to an additional 4% on top of that. 

A volatile exchange rate can also significantly impact the cost businesses incur during a transaction. For example, against the US dollar, the euro has lost around 6% in value since this time last year –so if your business is based in the US and you’ve had regular transactions in Europe in the last twelve months, your profits could have also varied by 6% during that time span. 

 

Impact on international trade 

 

Aside from the more obvious impact of fluctuating rates on international business payments, there are other ways businesses can be exposed to the impacts of FX - especially those conducting operations overseas.

For example, a country with a stronger local currency can make exports more expensive for foreign buyers. This could have several knock-on effects for businesses – for one, it could potentially reduce sales volume. 

 

Competitive advantage 

 

On the other hand, a favourable exchange rate can bring about a competitive advantage for businesses, especially SMEs and enterprise-level businesses ready to thrive. That’s because a lower, or less expensive, exchange rate can make a company's products or services more competitively priced abroad – which could ultimately lead to increased revenue. 

Optimising your B2B cross-border payments

There are several factors businesses should consider to harness the full potential of international transactions. Let’s delve into some of those. 

 

1. Choose a specialised business payment solution 

 

There are lots of international payment solutions to choose from, but finding one that completely aligns with your business needs is important. 3S Money offers a number of pricing plans to suit all types of businesses, and is an efficient, secure, and cost-effective payment solution. Check your eligibility today to get started and be preapproved in as little as fifteen minutes.  

 

 

2. Consolidate your payments 

 

Combining multiple smaller payments into larger, less frequent transactions is a great way to optimise your B2B cross-border payments. Instead of making multiple international payments that each incur transaction fees and FX-related losses, consolidating your payments can help reduce your business transaction costs and administrative overhead. 

Take e-commerce retailers for example. If you're an e-commerce retailer that has a partnership with a particular supplier, consider negotiating a quarterly payment schedule, rather than one that's in monthly instalments.  

Other ways to optimise your B2B payments include:  

  • Tracking exchange rates and fees: regularly tracking exchange rates and fees to find the best deals to make transactions. 
  • Using real-time payments: consider using real-time payments to speed up payment processing and improve cash flow. 
  • Staying ahead of trends: stay updated on global economic and political developments that could impact exchange rates and regulations. 
 

 

Overview 

 

Now that we've covered what B2B cross-border payments are, what impacts them and how to optimise them for your business, let's review the key points:

  • Thanks to the rise of fintechs, digital banking solutions and EMIs, businesses can now experience simple cross-border business-to-business payments.
  • Cross-border payments are becoming more popular, with 58% of SMEs saying they're sending and receiving more B2B cross-border payments now than before the pandemic.
  • 3S Money’s banking solution platform can facilitate your payments and help you enter new international markets with ease. 
  • Foreign exchange (FX) plays a huge role in the final outcome of international transactions. It can either potentially reduce sales or give your business a competitive advantage.
  • Implementing a cross-border payment solution that aligns with your business needs is important. 3S Money is an efficient, secure, and cost-effective solution, with a number of pricing plans to suit all types of businesses.
 

Secure your transactions with 3S Money’s B2B payments solution

In a global economy, optimising B2B cross-border payments is not just a necessity - It gives your business a competitive advantage. With platforms like 3S Money, you can redefine your international transaction experience.

Ready to take the next step? Request a demo, or get started today to explore how we can facilitate your B2B payment needs. 

 

B2B cross-border payment FAQs

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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