Managing international payments is a growing challenge for Australian small and medium-sized enterprises (SMEs). With increasing global operations, these businesses face complexities such as fluctuating exchange rates, high transaction fees, and intricate compliance requirements. Traditional banking systems often fall short in providing the agility and transparency needed for efficient cross-border transactions.
In this article, we explore the common hurdles Australian SMEs encounter with international payments and how modern solutions can address these issues, enhancing financial control and operational efficiency.
- The challenges of international payments for Australian SMEs
- Benefits of modern international payment solutions
- How Budgetly supports Australian SMEs in managing international expenses
- Looking ahead: Smarter ways to manage international spend
The challenges of international payments for Australian SMEs
1. High transaction costs and hidden fees
Traditional banks often impose significant fees on international transactions, including unfavourable exchange rates and service charges. These costs can accumulate, impacting the profitability of SMEs engaged in global trade.
Australians collectively lose over $150 million annually due to poor exchange rates and international fees charged by banks.¹
2. Lack of real-time visibility
Delayed transaction processing and limited tracking capabilities hinder SMEs from having real-time insights into their international payments. This lack of transparency can disrupt cash flow management and financial planning.
43% of Australian SMEs say it takes more than five days to reconcile international payments using traditional tools.²
3. Complex compliance and regulatory requirements
Navigating the regulatory landscape of international payments is intricate, with varying laws and standards across countries. SMEs must ensure compliance with anti-money laundering (AML) regulations, tax laws, and reporting standards, which can be resource-intensive.
4. Currency volatility risks
Fluctuating exchange rates pose a risk to SMEs, potentially leading to unexpected costs and reduced profit margins. Without proper hedging strategies, businesses are vulnerable to currency market movements.
Currency volatility has cost Australian businesses an estimated $5 billion in lost revenue over the last five years.⁵
Benefits of modern international payment solutions
1. Cost savings through competitive exchange rates
Fintech platforms often offer more favourable exchange rates compared to traditional banks, reducing the cost of international transactions for SMEs.
2. Enhanced transparency and tracking
Modern payment solutions provide real-time tracking and detailed transaction histories, allowing SMEs to monitor their international payments effectively.
76% of Australian small businesses want real-time insights into financial data to support better decision-making.³
3. Simplified compliance processes
Automated compliance checks and integrated reporting tools help SMEs adhere to international regulations with less manual effort.
4. Risk mitigation strategies
Advanced platforms offer tools for managing currency risk, such as forward contracts and real-time rate alerts, enabling SMEs to make informed decisions.
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How Budgetly supports Australian SMEs in managing international expenses
Budgetly offers a comprehensive budget management solution tailored to the needs of Australian SMEs dealing with international payments:
- Multi-currency support: Facilitates transactions in various currencies.
- Real-time expense tracking: Provides immediate visibility into spending, aiding in cash flow management.
- Auto-convert at leading FX rates: Automatically converts funds at competitive exchange rates, helping businesses save on international transactions and reduce exposure to currency fluctuations.
- Built-in security features: Enables instant card freezing and re-issuing to reduce risk and support flexible team operations.
One example is SOMAÍ Pharmaceuticals, a company with operations spanning multiple countries. With overseas branches and staff incurring expenses across borders, they turned to Budgetly to simplify reconciliations and improve visibility across teams. Since adopting the platform, SOMAÍ has saved 8 hours per month on expense reconciliation alone, a clear demonstration of the platform’s ability to reduce complexity at scale.
By leveraging Budgetly's platform, Australian SMEs can navigate the complexities of international payments with greater confidence and efficiency.
Looking ahead: Smarter ways to manage international spend
The landscape of international payments is evolving, and Australian SMEs must adapt to remain competitive. Embracing modern payment solutions like Budgetly can lead to significant improvements in cost management, compliance, and operational efficiency. By addressing the common challenges associated with cross-border transactions, SMEs can focus on growth and expansion in the global market.
Over one in four Australian SMEs are now involved in international trade or cross-border services.⁴
Citations
- ACCC, Foreign Currency Conversion Services Inquiry, 2019
- Deloitte Access Economics, The Cost of Inefficiency: Business Payments, 2020
- Xero & Forrester Consulting, The Next Chapter for Small Business, 2022
- Austrade, International Market Insights for Australian SMEs, 2021
- Western Union Business Solutions, Global Business Payments Barometer, 2020
Ready to reduce complexity and take control of international expenses?
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