The banking system wasn’t built for the 21st century. But changes are in motion that will have long-term effects on the global small business community. Banks and other payment providers are typically local, which means they use a patchwork of systems to move money internationally. This makes managing money slow and expensive for anyone anytime they need to complete an international transaction. This is a problem that most often affects the ones that can least afford it 一 enter small businesses that do not have the option to wait for better rates or the clout to negotiate them.
When it comes to traditional banking options, small businesses in the U.S. still struggle to get the necessary service they deserve at traditional banks, juggling at times six to eight disparate solutions to solve their financial management needs. What’s more, exporting can help small businesses – who make up 98 percent of all exporters – to increase profits, reduce market dependence and stabilize seasonal sales throughout the year, which puts added emphasis on the importance of having a reliable financial infrastructure. In fact, small business exports accounted for $541 billion in 2019, with no signs of that number slowing down.
This predicament can waste precious time and money, which small businesses can’t afford to lose, especially in a highly competitive market and one that is just now beginning to reopen on a global scale. Subsequently, for small businesses that want to or already are growing their business internationally, it is best to do so without the high fees, hefty administrative, and headache of a local bank. Fortunately, there are ways around this.
If expanding beyond your local market has long been a goal, there are critical financial steps to take in order to achieve and sustain success – most notably, in your ability to understand and prepare for exchange rates . Here are three steps every small business can take to increase profits and cut outgoings when expanding across the globe:
1. Go International by Going Local
Understanding the local financial landscape can be a first step to success. Small business owners should do diligent research on any new market they plan to sell in, and stay informed on any financial regulations, payment methods and preferred currency. This will enable your small business to appear more friendly and accessible for new international customers. Plus, it will lead to retention and ideally a loyal customer-base. Additionally, more than ever, small businesses need to consider things like payment gateways as they sell goods online and to an international audience. A payment gateway passes on information from the customer’s end to your end as the business owner. The payment then goes through your payment processing platform. Small business owners will need this on top of a merchant account to process payments, and there are several options to consider – including Stripe, PayPal, Payoneer and Square, among others.
2. Invest in a formal business account
If you run a small business, you know how important saving time and money can be. With that in mind, it’s worth considering where the money will land once it’s gone through the payment gateway. -especially if you have an international business. By utilizing options like a Wise Business account, you can save your small business up to 19x on international payments – a major impact on your bottom line. This allows you to receive multiple currencies without high recipient or conversion fees, and convert or move money within the Wise Business account itself or withdraw to external accounts. Similarly, your small business can pay invoices with the real exchange rate in 70+ countries from your phone or app — with 50 percent of payments arriving instantly or within an hour.
3. Build a global-friendly website
With eCommerce continuing its international dominance, consumers want and expect a seamless experience when navigating a website, no matter where in the world they’re shopping from. Everything from the search button to product pages – and especially the checkout experience – should be met with ease and brand uniformity. An easy payments experience can make or break consumer retention. Small businesses should always remember that their online presence is a natural extension of their brand, and to treat it with as much attention as you would a perennial product.
Doing business internationally can be a daunting task – but as the global economy continues to reopen and we once again embrace the idea of international commerce, small businesses should be prepared to meet consumers where they are: online. And do so with the best financial tools available.
Alastair Thompson is the US Business Development Lead of Wise.
International stock photo by Ferbies/Shutterstock