International payments only make up one-sixth of transaction values, but they’re still valued at $200 billion across the globe.
These international business transactions are vital for business management and running successful companies.
But what are they and how do they work? Keep reading to find out all you need to know
What Is an International Payment?
International payments encompass any type of money transfer between accounts that are in different countries. For example, if you were paying someone in Germany, but you’re in the United States, this is an international payment.
These payments are very important to the global economy, and there are many different types of transactions covered under this section, and the payments can also be made in different currencies. Some of these payments may also require a mediator, like RPO services, to mediate the transfer of money.
Types of International Transactions
Some of the most common types of international payments include spot transfers, market orders, and forward contracts.
Spot transfers are great if you want to have a fast international payment. These are also known as wire transfers, and you can immediately send the money from one bank to another, even if they’re in a different country.
You’ll agree on an exchange rate when you submit the transfer, and the money is sent over electronically.
Market orders are a little bit more complicated because you’ll have to set up future international business transactions. You can base these transactions on future currency rates.
For example, if there is a really good exchange rate that you want to hit, you can wait until that limit is met to send out your transfer. That way, you can get the best currency exchange rate.
With forward contracts, you can lock in the currency rate for a future transaction. This will protect you from any currency fluctuations and you’ll book the payment. Future contracts are normally good for up to twelve months, and they can be helpful if you’re selling or buying any business assets.
How Long Does It Take?
The time of the week and day, the transaction method, the countries involved, and how much verification is needed for the transaction can all play a role in how long it takes.
You should figure out how long it will take before you fill out the invoice due date. Your money could take a few minutes and arrive on the same day, but it could also take up to a week for more complicated transfers.
Keep in mind that other countries may celebrate different public holidays, and this can slow down your transfer time. Consider all of these factors when you’re planning your transaction timeframe to ensure all of your invoices are paid on time.
Learn More About International Business Transactions
These are only a few key facts to know about international business transactions, but they’re important for your business if you have transactions with other countries.
Running a business can be challenging. Thankfully, we’re here to help. We have even more helpful information to ensure that you have all the help you can get to run a successful business.
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