How can banks make international transactions less complicated?
When selling or buying internationally, the main issue is getting paid for what you sell or receiving what you bought. If getting paid for what you sold requires receiving money from someone overseas, one specific service the bank offers is an inbound international funds transfer.
On the other side, if you are buying something from an overseas seller, the person you are buying from wants to be paid for what they are selling. Sending money overseas on behalf of clients is called an outbound foreign funds transfer. Both transactions can be made in either U.S. dollars or a foreign currency from the checking account you maintain through your local bank.
How can you ensure your new business partner is legit?
Another service banks offer is risk mitigation. If you are selling to someone you don’t know well in a foreign country, you have to make a decision on whether or not you are going to send payment before they send you anything. Alternatively, you could send the product with an invoice, and the buyer pays for it upon receipt. That’s called open account. Each of these scenarios has risks to one party in the transaction.
Unlike eBay, which tracks buyer and seller satisfaction, there is nothing similar for international business. To make up for this lack, banks help their customers gather information on the companies they are potentially doing business with.
Why would business owners want to use these services?
To make sure they get paid, to drive better relationships with business partners, and to be more competitive with people they compete against around the world. If you are selling to someone in Germany, you may want your money up front in U.S. dollars. At the same time, your competition may be an Italian firm that does business in Euros, the same currency in which the German company conducts its business. Now you are at two competitive disadvantages.
Your international banker can help you understand the services that are available, help you structure the services, help you lower the cost of using those services, and, ultimately, help you expand your international business.
