With numerous businesses outsourcing services worldwide, finding an efficient payment process to pay overseas contractors is critical when it comes to maintaining strategic partnerships, while simultaneously avoiding complications as you expand your business.
Your contractors expect to be paid on time, just like your full-time employees — without any discrepancies. In order to maintain smooth ties with your contractors, it’s important that you as an employer take into consideration three aspects when transferring money to overseas contractors; your transfers must be:
Affordable: Watch out for Hidden Fees
Most commonly, people resort to their bank when they’re looking to make an international payment, entirely out of convenience and trust. However, many people don’t realize that their exchanges rates are poor and subjected to exorbitant fees. Typically, no one bothers to compare exchange rates to the real mid-market rate. As a result, the rate at which they pay in local currency to send US Dollar or any other currency tends to be quite high. Moreover, when your contractor receives payment and has to convert to their local currency, they get reduced rates and lose out again.
Banks may seem like a convenient option for transferring money overseas, however; making numerous payments consistently will undoubtedly add up if you rely on this method due to the inefficiency of wire transfer.
That’s why it’s beneficial to do your research and effectively analyze alternative options. We’ve listed two key aspects to consider when determining which provider is the most cost-efficient for transferring money to your international contractors:
- Additional Fees: Distinguish what type of fee you are being charged; i.e. a flat fee per transfer that doesn’t change, a fluid percentage dependent on the amount being transferred, etc. Then, compare this to how much you are losing. Also, pay attention to receiving fees– remember, each country entertains very different laws and regulations when an institution receives your money.
- Exchange Rates: Exchange rates are constantly changing and regardless of where you go to transfer money, most providers will not reveal what their unmodified rate is. That’s why it’s crucial that you compare exchange rates. Ask yourself how much money your beneficiary is receiving at the end of the day- this is the easiest way to determine your best options.
Efficiency: Time Matters
Managing payroll can be hard when trying to develop your small business. Ensuring that your contractors receive their payments in a timely and respectful manner is even harder, given the hassle that bank wire transfer will put you through. Maintaining positive partnerships with your international contractors is crucial and it lies in showing them mutual respect for the services they provide you with. The consistency and predictability of their pay cheques are reflective of this respect. Thankfully, there are platforms out there that prioritize the speed of your payment, which banks cannot do. Banks run wire transfers- and those are very low priority and outdated. Would you drive a 40-year car that breaks down the majority of the time?
This process has not changed in the past 40 years, despite the incredible advancements in technology since then, not to mention that it takes unnecessary amounts of time. If it takes weeks for your overseas contractors to receive their payment, just think about how unhappy they are going to be with you as an employer- and how harmful it is for the development of your business. In the interest of time and money, your best option would be to invest in a platform that uses a method to transfer your money internationally that does not depend on wire transfer.
Tax liabilities are something many people typically don’t think about when hiring an international contractor. Every country abides by different tax laws and regulations and it’s very important that you personally look into this.
Certain countries see that you, as an employer, must account for vacation pay, insurance, and tax policies in both the country you are based out of and the country you have hired contractors in. It would be in your best interest to talk to a professional in this regard, as many services have no control over what happens once the money reaches the respective country- and frankly, don’t care. This could waste valuable time and effort if you’re hit with complications.
REMITR Can Be Your Go-To Solution
By using a company like REMITR to pay your international contractors, you are— by far— saving a great deal of money. Rates are substantially lower than mainstream banks and third-party services. Although the rates your bank offers may seem ideal and conveniently accessible to you, think about how much you would be saving if you didn’t have to pay all of those extra fees. That’s why you need to find a service that prioritizes customer delight. Unnecessary bank fees are detrimental to a small company looking to expand its operations.
Going with REMITR also guarantees highly trusted security. When businesses are making mass payments to numerous destinations across the world, they want to know their money is safe. REMITR is a registered and trusted financial payment provider overseen by FINTRAC; the leading national financial intelligence regulator in Canada.