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International payment methods which is best for you

Every business knows how important it is to take care of its money and, where payments are concerned, it’s vital to make sure everything is done as securely as possible.

But when you’re trying to send funds to suppliers dotted all over the world, choosing a method of payment that protects your interests without being costly can be a difficult balancing act.

There are plenty of options available, and it’s worth exploring all of them before deciding upon the one that will best suit your needs. Whatever you decide, do make sure you stick to an established payment channel with a provider you know and trust – any supplier that insists on being paid in an unconventional manner should be a cause for concern.

Wire transfer
Perhaps the simplest way of paying overseas suppliers is by wire transfer the process of electronically transferring funds from your business bank account into that of a supplier. This falls into the same category as standard credit or debit card payments in that both are classed as cash-in-advance methods – with a few clicks on a screen, funds are sent quickly to recipients anywhere in the world.

On the one hand, individual PIN numbers for authorised individuals make it easier to root out fraud, and cash-in-advance payments have a high level of traceability. That said, it’s impossible to stop a payment after it’s been made and it can be difficult to get them back if something goes wrong. In addition, businesses should never take the phrase cash-in-advance literally – upfront payments will upset cashflow while offering no protection against non-delivery.

Credit note
Using a credit note (or letter of credit) is one of the safest ways to make payment. Essentially, a buyer reaches an agreement with a bank to obtain credit. The bank then agrees to pay the supplier on the proviso that the terms of the credit note have been met, once this has been verified by checking all of the relevant documentation.

In many ways this balances the risks of buyers and suppliers, which is why credit notes prove so popular – sellers know they will be paid for delivering the goods, while a buyer is more confident they will receive them. However, this can be costly by the time interest and other expenses mount up, and suppliers will need to produce a lot of paperwork before they receive any funds.

Documentary collection
Sellers send a demand for payment in the form of a draft or something similar through their bank to that used by the buyer, sending all the shipping documents related to the transaction with it. The bank then gives those papers to the buyer when they receive a promise of payment or payment in full – but if the buyer defaults, it is under no obligation to pay the sellers bank.

This can often be cheaper than using a credit note and requires no credit facilities. There are no compliance rules either, offering plenty of freedom for traders. Still, sellers will often balk at having no guarantee of payment from the bank and are often uncomfortable with having no protection against orders being cancelled. Many buyers also prefer to have the financing option that comes with a credit note.

Another alternative is to have payment held in Escrow until the terms of your agreement have been met. Escrow is used at and essentially, it allows a third party to keep hold of the funds until both buyer and supplier are happy the order has been processed.

The cost is often minimal compared to other payment methods, but it has other benefits. For example, buyers have some protection against non-delivery or fraud because the payment is not made until they have received their purchases. Sellers, meanwhile, have a sign of good faith in which a buyer demonstrates they have the means and intention to pay, as well as confirmation of this from another trusted source.

Due diligence and minimise risks
Whatever option you choose to receive or make payments, there are always things that can go wrong. But by understanding and managing risks, you can avoid many of the problems.

Always check and double check you have the correct payment details, and ensure you are protected if you do not receive your goods or services. Due diligence is the key when money is at stake.

James Hardy is head of Europe at


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