What should be taken into account when paying suppliers?
Once your company has negotiated whether to pay in advance, by letter or in credit, you will have to take into account other aspects of the payments to your international suppliers that might affect your costs.
You will need to set a currency which will be used to make the transaction. Depending on the currencies of the parties’ countries, there will be incentives to negotiate in one of the parties' specific currencies. The most common currencies to pay invoices are USD, EUR and GBP. Make sure that the currency is included in the invoice to avoid misunderstandings.
You will also have to take care of the foreign exchange rate and payment costs. There are multiple ways to move the money from your bank account to that of the supplier, so you will have to find out which one is more suitable for your company:
Fx intermediaries (non-banks): these are specialized solutions that will allow you to pay your international suppliers. Even though these operations are often secure, they can lead to potential problems in terms of increasing change rates, delays, etc.
Understanding all the specificities of the fx billing can be very challenging, but it can help your company save big amounts of money and be faster and more efficient when paying international suppliers.