Globalisation has seen companies extending their network of overseas suppliers and, with this expansion, comes an increase in cross-border payments. Financial technology too has expanded its capabilities in recent years responding to the increasing demands of businesses particularly in the area of payments.
As businesses expand beyond their national borders, there naturally comes the increased demand for Foreign Exchange (FX) services. Getting the best rates of exchange should be a priority for many businesses as keeping costs low can contribute to long-term success in international markets. What is surprising however is that many SMEs are not aware of alternatives, to their traditional bank, for cheaper FX services. In addition, larger corporates can often be left frustrated by legacy banking systems to manage their sometimes complex payment requirements when again, an alternative should be considered.
We take a look at 4 reasons why a payment services provider (PSP) would make the ideal B2B payments partner:
1. FX rates & fees
A recent analysis by payments consultants Accourt discovered that small firms are paying out £4bn a year in built-in costs when they transfer money overseas using Britain’s high street banks. The margin or ‘spread’ that the banks add to the exchange rate generates a high proportion of income to the bank on a foreign exchange deal. Add to that the ‘fixed fees’ charged as standard and businesses with regular payments could end up executing inflated transactions which could significantly erode profitability.
The importance of an efficient FX strategy cannot be overstated, especially in times of geopolitical uncertainty. Businesses still engage with their bank to transfer funds but many are unaware of alternative payment providers that offer a more efficient payments solution – one that costs less. Certain PSPs like FEXCO Corporate Payments provide upfront exchange rate and fee information giving clients total transparency on payment costs before transactions are made. This guarantees that there are no surprises as a result of hidden costs which are often discovered when it’s too late.
2. Customised payment solutions
Supplier payments only account for a small percentage of bank revenue and so financial institutions often only invest in them accordingly. Core competencies including deposits, investments and loans which provide a higher margin are often prioritised by the banks.
The legacy client server technology used by financial institutions can be very restrictive, and with the accounting needs of business varying widely, the lack of customisation can hinder the international payment process.
Focusing on their own competencies, PSPs like FEXCO Corporate Payments, invest in innovative technology to solve payments challenges, producing systems that are both agile and user friendly.
3. No Multiple workflows
Payment solutions offered by financial institutions, outside of the profitable card channels, may not in their entirety align to the specific needs of a business. As a consequence, it may be necessary for businesses to work with a number of transactional files to cater for their multiple payment requirements. This is both complicated and unnecessary.
FEXCO Corporate Payments offers a single file solution for varied and numerous payment types, eliminating the reliance on multiple platforms and workflows. For example, FEXCO provides file integration which allows clients to upload a payment file (containing multiple payment types, currencies and destinations) directly from their ERP system to the FEXCO Payment Platform. This offers greater flexibility than standard bank file integration with superior validation and automated reconciliation back to their ERP.
4. Customer support
B2B payment solutions offered by the banks simply involve funnels with which to move various payment types with little in the way of front or back end support. Businesses, especially busy Accounts Payable functions, need to be assured that payment queries are answered promptly and any errors are rectified, preferably before payments are entered into the international banking system. Reputable PSPs offer clients a dedicated account manager who will advise on the timing of payments as well as securing a better FX rate. For payment queries, a readily available customer support team to advise on bank detail formatting or routing payments to international accounts is fundamental to the smooth transfer of funds.
There are many reasons why partnering with a PSP like FEXCO Corporate payments is a better option to manage your business to business payments. Its core function is in providing payment efficiency with validation tools, straight through processing and the benefits of cloud technology.
FEXCO Corporate Payments has been providing business clients with innovative payment solutions for over 25 years. Sign up for a free account today and get complete transparency on rates and fees. Alternatively you can call us on Ireland: 1800 246 800 / UK: 0800 840 2887