Whether you have your own business already, or are looking to start one, there always comes a time when you may need to seek out overseas suppliers to fulfil your business needs or services.
In the 2020 to 2021, there is a 23% increase in the number of Australian business importers from the previous year, making the value for overseas imports around $309 billion dollars. Here’s are some things you should know to make payments to suppliers overseas from Australia.
Ways to pay suppliers abroad from Australia
There is a comfort with the familiarity of making payment to an Australian suppliers. From handing over cash, to making a bank transfer using Bpay, PayID or their Australian BSB and account number, these methods are the most used by Australian consumers.
When it comes to paying suppliers overseas, you’ll likely be faced with an invoice or call for payment with unfamiliar bank codes, instructions and different currencies.
This doesn’t have to be a challenge though, even if it is the first payment to your overseas supplier. Here are some ways to pay suppliers abroad from your Australian business.
- PIK Payment
- Bank to bank transfer
- Credit card
- PayPal
- International money transfer providers
We’ll dig a little deeper into each option, and the key things you need to know about them.
Payment with PIK
Enjoy the ease of multiple foreign currencies transaction with no hidden fees. The Product Document shows the list of foreign currencies transaction offer by PIK Payment. You will be able to send and receive your suppliers payments globally as if you were doing business locally.
Credit card
Using a credit card to pay an overseas supplier is possible and many businesses do utilise this method for smaller payments, especially bills payable online. Depending on your credit card provider, there may be fees incurred including international transaction fees, currency exchange conversion fees or margins and interest for late payments. This can get costly on large payments or frequent orders.
Bank to Bank transfer
One of the most common methods to pay suppliers overseas is by using bank to bank transfers. Generally, if you have a business account with any of the big 4 banks like NAB, Commonwealth Bank, ANZ or Westpac, you’ll be able to use their international money transfer (IMT) facility. You should watch out for extra fees that are incorporated into bank to bank transfers including intermediary bank fees from using the SWIFT network, foreign transaction fees or margins included in their own foreign exchange rate.
PayPal
PayPal is a well-known multinational company that allows people to send and receive money through their service. PayPal may be a preferred method for your overseas supplier as PayPal is in many parts of the world. Depending on where your supplier is and what currency you need to pay for your goods can incur different fees on the PayPal platform.
International Money Transfer Providers
Outside of the big banks and PayPal, you’ll also find other international money providers that specialise in moving money overseas for businesses. Some companies include:
- Western Union
- OFX
- Airwallex
- WorldRemit
- XE
Depending on which company you choose can vary the fees, currencies available and countries where you easily pay suppliers outside Australia.
Important things to keep in mind when paying suppliers abroad
Before you lock in your money transfer to an overseas supplier, there are a few important things to keep in mind.
1. Check that what you are importing can be imported into Australia
Importing goods into Australia requires a bit of research and preparation, especially for businesses seeking out a new supplier abroad.
There are goods that don’t require a formal import declaration including:
- Low in value
- Personal effects
- Software downloads
This changes if you are looking at more complex imports that:
- Are over $1000 AUD in value
- Prohibited or restricted
- Could pose a biosecurity risk
- Require duty taxes to be paid
It's important to check what your requirements to the Australian government are before paying any supplier abroad for an order. Delays or issues with releasing your items at the border can impact how your business runs.
2. Verify the reliability of your chosen supplier
Knowing who and where you are sending your money to is crucial when dealing with overseas suppliers. You can do this by checking for the company registration through a local registry, using verified databases that list suppliers, research online reviews and if possible, and request any certifications for goods before they are ordered.
3. Develop a well-defined supply agreement with clear terms
You may think that there aren't any protections when dealing with overseas suppliers. Although protections vary across countries, keeping everything above board with clear cut supply agreements can put rules in place that can support any issues endured down the track.
When setting up a supply agreement, terms between your business and the supplier should be clear and include items like clear descriptions of items, clear guidelines on payment methods, pricing terms, shipping or delivery speed, warranties and any liability notices.
4. Understand the fees involved
As mentioned above, many payment methods can come with extra fees including margins on exchange rates, foreign transaction fees and general processing fees. To save yourself from paying more for your incoming goods, choosing a reputable provider that is upfront with their fees can help save your business heaps in the long run.
Depending on what you import, you may also incur fees associated with bringing those goods in. Fees are from any logistics, storage, custom duties, clearance permits, or other import related fees that are based on your order.
5. Understand your tax obligations
That leads us into the last key thing to keep in mind. Just because goods are imported from abroad does not mean they are exempt from goods and service taxes (GST) here in Australia. According to Australian tax law, It is up to the Australian business owner to determine whether the goods they are importing for commercial purposes is subject to GST. Doing your own research or seeing professional guidance for your obligations can help clear up any confusion before you send your money abroad.
Staying safe when sending payments abroad
When money is involved, new and improved scams are just around the corner. You can keep you and your business safe by:
- Verify each and every supplier you contact
- Only communicate with suppliers through secure channels
- Use multi-factor authentication (MFA) on accounts
- Never share sensitive information like passwords with anyone
- Research the latest trends for scams
- Be cautious of unsolicited emails or payment demands
- Double check the payment details of your supplier
- Update your computer software regularly
- Use a reputable payment provider to send money overseas
- Don’t jump into deals that seem too good to be true
Even when you have built a solid relationship with a supplier, scams and opportunistic criminals are always on the lookout for ways to infiltrate high worth money movements. Using your own due diligence to stay a step ahead can make sure all your supplier payments go through without a hitch.
Sources:
- Wise Paying suppliers overseas from Australia
- ABS Statistics
- NAB international money transfer business
- ANZ international money transfers business
- Commbank international money transfers business
- Westpac international money business
- PayPal sending money transfers
- Australian business importing
- ATO GST importing