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Global trade has made a remarkable rebound since the height of the pandemic. Pre-Covid, global trade stood at about $25 trillion. Reports from the beginning of the year suggest that that figure rose to $28 trillion by the end of 2022.
That’s better than most experts predicted, and for SMEs it represents a wave of new opportunities, with access to larger markets and new pools of customers.
However, new opportunities can bring with them new challenges. This is especially the case for SMEs who are just getting started with managing cross-border payments. In which case, they may fall victim to strategic and tactical mistakes that are easily avoidable, but that can pose real risks to businesses.
Fortunately for you, cross-border payments are our expertise, and in this article we outline the most common mistakes that SMEs are likely to face when making cross-border payments and, more importantly, what they can do to avoid them.
In a hurry? Below are all the key points and takeaways from this article:
- Use an IBAN checker tool to make sure you’re entering the correct digits before making a payment
- Review bank holidays in the countries of all your partners ahead of time to avoid unnecessary delays in cross-border payments
- Are you a victim of hidden cross-border payment fees? Use our Savings Calculator and find out
- Hedge foreign exchange risks to protect your FX rates. Click here to find out more
- Don’t choose a bank as your cross-border payments partner just because it’s easy. Take some time to review your options and see what’s best for your business.
Not verifying recipient’s details
Ensuring secure, timely payments is all about the details. But let’s be honest, mistakes happen, especially when manually entering long character identification numbers – like IBAN.
And the repercussions of entering the wrong digits can be pretty bad! Simple IBAN checker tools like this one can help you to avoid entering incorrect information that might incur unnecessary costs and processing delays.
Protect your business and validate an IBAN from anywhere in the world.
What’s more, not verifying your beneficiary's details exposes you to the risk of fraud (did you know that 31% of fraudulent transfers are made in the context of international transactions?).
Overlooking bank holidays
Why exactly is it that cross-border payments take so long? Bank holidays may play a greater role than you think, slowing down the sending and receiving of cross-border payments, so it’s important for finance teams to plan around them.
Sounds straightforward, right? Not quite. Even though you probably have all the bank holidays local to your country committed to memory (hello long weekends!), they’re probably not the same as those of your international supply partners.
For instance, while lucky Japan has a massive 16 national holidays to look forward to in 2023, England and Wales only have nine.
Not keeping on top of this type of information is easily done, but it can result in unnecessary and potentially problematic issues. You can avoid this mistake and ensure that all your partners are paid on time by reviewing bank holiday calendars before making payment timeline commitments.
Settling for hidden fees and non-competitive rates
Did you know that in the UK last year, hidden cross-border payment fees cost consumers and businesses £5.6bn? That’s just in 2022… and in one country!
It’s unfortunate, but the cross-border payment industry is filled with hidden transaction fees and exchange rate markups. Worse still, not all providers are transparent about their policies and rates upfront. These hidden fees are often passed on to recipients, who end up paying the unexpected costs. Unsurprisingly, this can cause friction with suppliers.
Don’t worry, though. All you need to do is find a provider who’s upfront about fees, rates and service levels. At iBanFirst, our fees are totally transparent. What you see is what you pay. There are no nasty surprises.
Are you worried that you’re paying too much in hidden cross-border payment fees? Try out our free Savings Calculator now and see how much you could save.
At iBanFirst, our fees are totally transparent. What you see is what you pay. There are no nasty surprises.
Not protecting your FX rates
Foreign exchange (FX) rates are famously unpredictable. Their fluctuations can be a real pain, and not just for your next holiday abroad! In a business sense, they can impact your bottom line, creating risk and making long-term planning difficult.
That’s why we offer our customers a hedging FX solution. Basically, this means locking in a specific exchange rate for future transactions. It removes the guesswork when dealing with the currency exchange market and means that you can comfortably predict your supplier payment strategy.
Explore a range of forward contracts to lock in your currency exchange rate for up to 24 months.
Choosing a provider before comparing all your options
When you’re shopping around for a provider to help manage your cross-border payments, chances are you go straight to your bank. We get it. It’s easy, quick and convenient. But is it the right decision for your business?
It’s possible that your bank doesn't offer the best-in-class cross-border payment features that we do, and if that’s the case, you may be losing money, time and efficiency.
Before making a decision, take some time. Compare several cross-border payment providers and see which one is best to serve your long-term needs. Below is a checklist that might help!
Cross-border payment provider comparison checklist
- Review rates and fees
- Evaluate transparency and recipient experience
- Compare transaction speeds
- Explore FX risk management tools
- Ensure provider offers expert customer support that’s easily accessible.
Partner with iBanFirst to open nominated accounts in over 30 currencies and issue fast, cost-efficient and reliable cross-border payments.
iBanFirst: A reliable partner for your cross-border transactions
Ready to avoid these common cross-border payment mistakes and enjoy the benefits of enhanced FX risk management? iBanFirst offers transparent cross-border payment solutions that will help your business thrive.
Find out what makes iBanFirst different:
- Powerhouse network: We leverage an extensive network of local and international banks and FX partners to deliver the fastest, most cost-effective cross-border payment routes for your business
- Unparalleled expertise: Our experienced FX specialists work as an extension of your team to navigate market intricacies with confidence and make well-informed decisions
- Cutting-edge platform: Reliable, easy to use and above all powerful, the iBanFirst platform will save you time by managing all your currency transactions online, from a single interface.