For UK SMEs operating internationally, managing payments across borders can quickly become more expensive than expected. Exchange rates, transaction fees, intermediary bank charges and time-consuming administration all add up. Of course, there are many payment methods out there, such as the popular Wise, but this doesn’t always fit every company.
Finding an alternative to Wise that offers a simpler approach to international financial management can be one way for growing businesses to gain greater visibility and control over their cross-border payments. While traditional payment solutions may work well for straightforward transfers, SMEs with international suppliers, customers and teams often need more flexibility.
Understanding the hidden costs of international payments
The most obvious cost associated with sending money abroad is the transfer fee. However, this is rarely the only expense businesses face. Foreign exchange is one of the biggest areas where costs can accumulate. Even a seemingly small difference between the mid-market exchange rate and the rate offered by a payment provider can have a significant impact when businesses make regular or high-value international transfers. SMEs paying overseas suppliers every month, for example, may lose a substantial amount over the course of a year without immediately recognising where those costs are coming from.
There can also be additional charges imposed by intermediary banks. International payments may pass through several financial institutions before reaching their final destination, with fees potentially deducted along the way. This can make it difficult for businesses to predict exactly how much a recipient will receive. Administrative costs also add up. Finance teams can spend hours reconciling payments, checking exchange rates, following up on delayed transfers and managing multiple accounts in different currencies.
Consolidate international payment processes
One way to reduce unnecessary costs is to avoid managing international payments through multiple disconnected systems. A growing SME might have one bank account for domestic transactions, another provider for international transfers and separate platforms for foreign currency management. While each service may solve a particular problem, the overall process can become difficult to monitor.
Consolidating cross-border payment activities where possible gives businesses a clearer overview of their international finances. Having better visibility over incoming and outgoing payments makes it easier to track spending, identify unnecessary fees and make more informed decisions about when and how to exchange currencies.
Pay closer attention to foreign exchange timing
Currency movements have a direct impact on the cost of international business. An SME that needs to pay suppliers in euros, US dollars or another foreign currency may find that the same invoice costs significantly different amounts in pounds depending on when the conversion takes place.
Businesses cannot always predict exchange rate movements, but they can develop clearer processes around currency management. For example, regularly reviewing expected international payments and upcoming cash requirements helps businesses avoid making rushed conversions at unfavourable times. Where appropriate, holding and managing funds in multiple currencies may also reduce the need for repeated conversions.
Look past the advertised transfer fee
A low-cost international transfer is not necessarily the cheapest option overall. Businesses should compare the full cost of a payment, including the exchange rate, transaction fee, potential intermediary charges and any additional account costs. Transparency is particularly important for SMEs, which may not have the resources to absorb unexpected expenses.
It can also be useful to review payment providers regularly. A solution that was suitable when a business made occasional international payments may no longer be the best option once overseas transactions become a regular part of operations.
Improve visibility over international cash flow
Poor visibility can lead to avoidable costs. If a business does not have a clear picture of its upcoming international payments, available currency balances and expected incoming funds, it may make expensive last-minute decisions. Creating a more accurate view of international cash flow allows finance teams to plan ahead. They can identify when currency will be needed, monitor outstanding payments and make better decisions about how funds should be allocated.
Automation can also play an important role. Reducing manual data entry and reconciliation helps minimise errors while freeing up employees to focus on higher-value financial tasks. For smaller businesses in particular, saving administrative time can be just as valuable as reducing transaction fees and this is where options like Fyorin can be particularly beneficial.
Keep international payments profitable
International payments are often viewed as a necessary operational expense. However, for SMEs trading globally, they can have an impact on profitability, cash flow and financial efficiency. Regularly reviewing payment processes, understanding the true cost of currency conversion and reducing unnecessary administrative complexity can all contribute to a healthier bottom line.
The right approach will depend on the size and needs of each business, but transparency matters. By understanding where hidden costs occur and taking a more strategic approach to cross-border financial management, UK SMEs can reduce unnecessary expenses and keep more of their hard-earned revenue working for the business.
Wandaneliah Kilgore writes the kind of expert financial advice content that people actually send to each other. Not because it's flashy or controversial, but because it's the sort of thing where you read it and immediately think of three people who need to see it. Wandaneliah has a talent for identifying the questions that a lot of people have but haven't quite figured out how to articulate yet — and then answering them properly.
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