How important is it to consider the way you pay foreign suppliers? Better exchange rates can make a big difference to your bottom line, especially when you’re making regular international payments to foreign suppliers. When it comes to saving money on international payments its not just about the exchange rate you get on the day and the transfer fees you pay. Timing is essential. The foreign exchange market moves constantly, and exchange rates can change dramatically on a daily basis.

Consider the Rand for example. Against the USD, the South African Rand often moves by as much as 20 – 30 cents a day which makes it incredibly difficult to manage. Added to this, importers & exporters are often exposed to these market conditions for up to 2 or 3 months at a time. So, the question remains, what is the best way to pay international suppliers?

Use a Forex specialist like fx paymaster

As an intermediary, we sit between the client and the bank and manage the entire payment process. In broad terms this includes securing better exchange rates, booking FX deals, completing paperwork, submitting payment instructions and in general, making sure the bank does what they’re supposed to do when they are supposed to do it. We are independent, which means our clients deal directly with us and we have our own processes and procedures. We have relationships with particular banks which we use for processing payments.

Banks have heavy cost structures which makes them difficult and expensive to deal with. We’re not built like a bank, we use the latest technology to process our applications and international payments. As a result, we can process new client applications in less than 24hrs and transfer money across the world easier, faster and cheaper than banks.

In 2017 we transferred over R 3,5 Billion for our clients. We deal hundreds of clients and process thousands of international payments every month; this combined volume gives us buying power and access to preferential exchange rates which we pass on to our clients. On average our clients save between 10 – 15 cents on the exchange rate versus the bank.

Click here to see how our rates compare to the banks.

Use your Bank

In South Africa, most people tend to still use the bank when it comes to transferring money abroad. Through experience we have found that they use the bank because they aren’t aware of the alternatives. Banks do offer peace of mind in terms of security but that comes with other problems. On top of the fact that its more expensive and takes longer to transfer funds with the bank, it’s also more complicated and often inconvenient.

Banks have different departments, outdated processing methods and thousands of clients of clients to deal with. Bank exchange rates and transfer fees vary considerably from client to client. SME’s tend to get hit the hardest on account of the fact that they often don’t have volumes or relationships needed to be able to negotiate better pricing. They’re just not bigger enough.

Use Paypal

For convenience, some companies in South Africa have started using Paypal to transfer funds abroad. We suspect this is done out of the sheer frustration of using banks, but it’s a heavy price to pay for a convenient alternative when there are better ways.

Paypal was designed to facilitate small payments between individuals and shouldn’t be considered for commercial solutions. Paypal charges between 2.4% – 3.9% per transaction which makes it incredibly expensive to transfer funds abroad.

For more information about using fx paymaster, check out the website www.fxpaymaster.com