Did you know that more than 95% of the world’s customers are outside of the U.S.? Yet, the international trade administration reports that only 1% of U.S. businesses deal in the global market.
In this highly competitive business world, capturing international markets is essential for your business’s growth. It offers vast opportunities to turn your local business multinational.
But, what’s the possible reason behind very few businesses exporting internationally? Well, not getting paid or failing payments is reportedly one of the reasons why small and medium businesses fear the global market.
Luckily, familiarizing yourself with cross-border innovative payment solutions will help you elevate your business. That’s why we’ll discuss a few methods you can use to facilitate international payments for your business. So, let’s begin!
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Cash-in-advance payment terms help avoid credit risk as you, as business will receive the money before shipping the product. Typically, wire transfers and credit cards are used to make the payment. With the advancement of technology, many businesses are also using escrow services to facilitate transactions.
Note: Customers do not quite prefer this method as they are afraid of losing money and not receiving the product.
Advancement in technology facilitates innovative payment solutions that help cover the entire payment value chain. The experts at HPS Worldwide payment solution explain that the transactions are generally made through an omni channel solution in this method. These solutions are fully integrated with international payment networks. Thus, it is very efficient and offers maximum safety and transparency.
Not to forget, you can also manage major back-office payment functions using these solutions. You can also look for different solutions as per the requirements of your business.
Letter Of Credit
Letter of credit (LCs) is another preferred method as it is very secure. Basically, LC is a commitment made by the buyer’s bank to the exporter. It includes different terms and conditions, which are verified using various documents. It is mainly used when businesses doubt the creditworthiness of buyers.
Nevertheless, it is also a safe option for buyers as the payment is made only after receiving the goods. Thus, both parties are protected against fraud.
Online payments are another effective and safe method for dealing in the global market. The payment processing time is often quick and takes just a few days to complete the transaction.
However, online payment service providers often charge transaction fees. And, they might not be available in every country. Therefore, it is essential to do your research before adding this as your primary payment method.
Last but not least, you can use the documentary collection (D/C) for collecting payment from the buyer’s bank. It is a transaction where the exporter or business entrusts the payment collection to its bank. The bank then sends documents to the buyer’s bank along with terms and conditions for payment.
Here, banks from both parties act as a facilitator for smoother transactions done on the set date.
To Sum It All Up!
These are some payment methods you can use to facilitate global payments. If you are interested in exporting overseas, you must do your research. Learn more about these methods and select the best option for your business.