Should Your Business Pay Overseas suppliers in U.S dollars or Local Currency?
When dealing with global suppliers, is it easier to pay them in their local currency or U.S. dollars? There may be no pat answer that applies to every country. In fact, many countries tie their currency value directly to the U.S. dollar, which can add stability to local exchange rates and speed up the transactions.
Advantages of Paying in Local Currency
On the other hand, there are a number of advantages to paying your foreign vendors in their local currency. For example:
Middlemen take their cuts:
When you pay your foreign client in U.S. dollars, that money needs to be converted. That conversion takes place at the local bank, and everyone between you and the vendor takes their cut in transaction fees.
Then there are those irritating hidden fees,
which everyone hates. In addition to the normal processing charges, there could be a conversion charge—and you can count on an exchange rate that will favor the bank.
Conversion takes time and irritates customers:
When the third-party institution converts the U.S. dollars, you are also looking at transaction delays and fielding impatient complaints. Paying in local currency upfront can keep your business flowing on a reliable, even keel, keeping your suppliers happy with a faster cash flow.
Fluctuating exchange rates are a problem:
Speaking of conversion rates, paying in U.S. dollars involves dealing with the volatility of exchange rates. From the time you are billed until the payment lands in the foreign bank account, the conversion rate differences could well eat into your profits.
As one safeguard against fluctuating currency exchange rates, your vendors, who also want to protect their profits, might pad their price quotes. That padding, of course, is in the vendor’s favor, so you’re paying more for your overseas products. Pay in local currency, and both you and the vendor know the exact price.
Accounting errors, combined with exchange rates, can be costly and time-consuming:
Then there are those inevitable Accounting errors that take time to correct. With cross-border payments, correcting billing and payment errors can be time-consuming and costly. Sure, mistakes happen, but when correcting those mistakes include complicated currency conversion—well, you get the picture.
It's easier and simpler to pay in local currency:
Pay in foreign currency, and you can deal with problems without the additional headache of currency conversion. It’s a matter of simplifying reconciliation. If the mistake or dispute with a British vendor involves £10000 it’s simpler to just deal in pounds sterling rather than $13200, which one month ago could have been at an increased exchange rate of $13400.
With local currency, there are fewer intermediaries.
Your suppliers receive the funds faster. Using MTFX accelerates the process further with quick turnarounds, reducing the involvement of foreign financial institutions, and guarantees the best available currency exchange rate.
How MTFX solves the problem of paying your vendors in local currency
With MTFX, as a business customer, you can send payments directly to your overseas vendors in the local currency with a secure online platform where you can send money worldwide in over 50 currencies to over 200 countries.
MTFX guarantees bank-beating exchange rates that are lower than banks. Its benefits for your business include:
A business portal to manage all transactions and import invoices from your business accounting software—Manage your international payments more efficiently and seamlessly with a multi-currency account.
A platform for online entrepreneurs who want better access to the global market— level the playing field by paying your overseas online customers in their local currency.
Automatic currency exchange rate alerts to notify you when an exchange rate becomes more favorable—Don’t make that high-value deal without a timely heads up on currency exchange rates.
Forward contracts to lock in the desired rate for a future exchange—Stay in control of your business’s funds and protect against foreign exchange risks.
Daily Market Analysis and weekly Analysis from financial experts along with a monthly currency outlook—Stay current with timely updates and market intelligence in managing your currency accounts.
Let’s Get Started!
In just a few minutes, you can begin sending money anywhere in the world by registering online for your MTFX personal or business account.
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Who can use the MTFX payment service?
Individuals and businesses who need to send money in foreign currency internationally can use MTFX’s services. The beneficiary of the transfer must have a bank account for the funds to be paid into.
Personal clients usually use our services to transfer money between their own accounts in two different countries.
Business clients usually use our services to transfer funds to suppliers, fund international operations, or repatriate overseas earnings.
Why should I use MTFX and not my own bank?
MTFX offers currency exchange rates that are 2-5% better than those offered by the banks. Personal clients usually save hundreds of dollars per transfer and for larger transfers, the savings can run into the thousands.
We also offer excellent customer service, dedicated currency specialists, and a 24/7 online platform with best-in-class technology that allows you to complete transfers from any device virtually anywhere in the world.
Business customers save with better currency exchange rates and proven solutions geared towards managing and mitigating foreign exchange risk. Our solutions include forward contracts, market orders, rate alert services, and much more - all backed by great technology and great people.
How do customers send funds to MTFX?
Funds can be transferred via wire transfer, Electronic Funds Transfer (EFT), or ACH payment services. MTFX maintains bank accounts in all major currencies with highly-rated banks. Our banking infrastructure ensures that you can transfer funds to us quickly and securely.
How long does it take MTFX to transfer funds?
Our global network of banking partners allows us to get funds to virtually anywhere in the world quickly and efficiently. Most wire transfers from MTFX will be received by your beneficiary within 24-48 hours. MTFX also offers same-day transfers that are almost instantaneous, as well as low-cost in-country payment services for your less urgent transfers. For further information please speak to one of our currency specialists.
Please read the following update before logging in to your MTFX online account
We have updated our online dealing system to provide you with better functionality, more unique tools and an overall enhanced client experience. MTFX Online 2.0 is now available for your dealing needs. You can begin using our enhanced online portal today.
Please note that the traditional portal will be available for use until MAY 30th 2021 at which point it will be decommissioned.