How to transfer to oversea suppliers?

Hong Kong businesses face delays, higher costs, and cash flow impacts when remitting funds to foreign suppliers through traditional channels. This article outlines the common overseas remittance options and analyses their advantages and drawbacks.

How to transfer overseas?

Common international business transfer options include professional overseas remittance firms, third-party payment platforms, bank wire transfers, money orders, and money changers. They each vary in terms of security, costs, and time. Their features, advantages, and drawbacks are outlined as follows:

Professional international transfer platforms

Platforms such as Airwallex, Wise, and OFX facilitate international fund transfers to overseas suppliers. These platforms offer competitive exchange rates and lower fees compared to traditional bank wire transfers. 

Bank transfers

Bank telegraphic transfers (T/T) are electronic cross-border fund transfers conducted among members of Society for Worldwide Interbank Financial Telecommunication (SWIFT) using the SWIFT system. While T/T transfers are known for their secure and reliable point-to-point transactions, understanding the intricacies of the SWIFT system can be challenging. Initiating a T/T involves SWIFT details for both sending and receiving banks, including names, SWIFT numbers, and the address of corresponding bank. These information are not easily accessible, and any inaccuracies can result in delays. Additionally, T/T are typically priced higher than interbank FX rates, leading to increased exchange costs.

Cheque remittances (money orders)

Cheque remittances, also known as money orders, is the conventional approach for sending money overseas. The process typically involves the sender providing funds to the bank, which issues a cheque sent to the recipient overseas. While fees are akin to T/T, processing is slower.  Upon receiving the cheque, the recipient must visit their bank in person to access the funds, which might not align with the supplier's expected timeline for payment.

Money changers

Money changers are a straightforward alternative compared to banks.  To initiate a remittance, remitters simply need to provide ID documents and confirm the exchange rate, dropping the extensive paperwork from traditional banks. Depending on the recipient's location, funds can be credited as quickly as 2 business days. 

However, these shops may lack transparency on their backgrounds and might not meet the compliance standards of banks and regulatory bodies. Instances exist where money changers' accounts are frozen due to security and money laundering suspicions.

Pros and cons: different ways of commercial transfer 

Key considerations for payments to oversea suppliers

When making transfers to overseas suppliers, there are several important considerations:

• Processing time: Overseas transfers vary in processing time based on the countries and financial institutions involved. To meet payment deadlines, it's recommended to send funds in advance. 

• FX rate: Fluctuations in FX rates could affect the total payment. It's recommended to check and compare the rate and fees on the day of transfer.

• Handling fees: Fees can be fixed or a percentage of the transfer sum. Some platforms may impose hidden charges, so it is best to understand the fee structure.

• Transfer limits: Transferring platforms might set minimum and maximum transfer limits. It is suggested to understand the platform’s rules for overseas transfers to prevent any shortfall that may hinder completing the transaction.

• Delays: Delays can happen when dealing with FX and overseas transfers. Allow sufficient time and proactively monitor the transfer status.

• Account requirements: Ensure the supplier has a valid overseas bank account before an overseas transfer. Different countries and financial institutions may have varying regulations regarding account opening and document requirements.

Information required for sending money to suppliers

The following information is required for sending money to supplies: 

• Supplier’s bank account details: Provide the name and address of the bank, account number, and SWIFT code (if sending through the SWIFT system.)

• Currencies and amount: Confirm the transfer amount and currencies.

• Purpose of payment: Specify the purpose, nature and any relevant information of the payment for reference.

• The remitter’s ID documents: Depending on local laws and the requirements of financial institutions, the remitter is required to provide a Certificate of Incorporation, and the relevant contract and invoices relevant to the transfer.

To ensure a smooth and error-free transfer, have these details and documents ready as per the instructions of the bank or remittance platforms.

Which overseas remittance method is best for sending money to suppliers?

Each overseas remittance channel has its own unique features, so it is crucial to weigh each factor like time, cost, and security. Typically, payment platforms and banks complete remittances in 5-7 business days. Yet, specialised services like Airwallex can expedite transfers in as quickly as just 1 business day. 

With Airwallex’s global reach, you can securely transfer in over 60 currencies to 150+ countries, including USD, GBP, CNY, EUR, JPY, KRW, and more.

Case study: Meat and seafood wholesalers

Meat and seafood imported from foreign countries often need to be delivered within a short period of time, so wholesalers must settle payments quickly. However, product pricing is subject to exchange rate fluctuations at the time of ordering, posing exchange rate risks if remittances are delayed.

Consider a seafood wholesaler in Hong Kong who orders seasonal fish weekly from Japanese suppliers. This requires exchanging Hong Kong Dollars for Japanese Yen every week to settle payments. With traditional bank wire transfers, the wholesaler incurs FX costs and handling fee with each transfer, adding up significantly over time.

With Airwallex's multi-currency Global Account, wholesalers can save on bank charges and enhance profit margin through favorable exchange rates. Moreover, Airwallex expedites transfers as fast as within 1 working day so wholesalers no longer need to make early payments days in advance, enabling more efficient cash flow management 

Case study: Action figure supplier

The surge in popularity of action figures has led wholesalers to procure large quantities despite production taking a long time. Given the substantial transaction volumes involved, international money transfer handling fees, typically calculated as a percentage, can significantly take up profit margins.

Consider a wholesaler specialising in anime action figures sourced from Japan, procuring hundreds to thousands of boxes per order, each transaction totalling at least HK$100,000. Historically, wholesalers relied on bank telegraphic transfers for remittances, incurring fees typically 1-3% higher than the bank's interbank exchange rate.These transfers incurred exchange costs of at least HK$1,000 per transaction. With other hidden handling fees, the remittance cost would add up to the cost of buying several more boxes of action figures.

Airwallex offers businesses the capability to remit over 60 currencies to 150+ countries and regions. With FX rate at as low as 0.2% above the interbank rate, businesses can save up to 80% on FX fees and enhance profitability. With Airwallex’s easy-to-use platform and multi-currency accounts, you can transact in local currencies with Airwallex’s local network and be credited as fast as 1 business day. Start today to streamline accounting processes and optimise cash flow management here. 

Airwallex: all-in-one financial platform to streamline international transfers

Airwallex is a globally recognised cross-border payment platform designed to simplify and optimise international money transfers for businesses of all sizes. Unlike traditional bank wire transfers, which can take several days, Airwallex leverages local networks to expedite transfers across 150+ countries. This efficiency makes it an ideal solution for businesses managing cross-border cash flow and individuals requiring fast, reliable international transfers.

Airwallex (Hong Kong) Ltd is licensed as a Money Service Operator by the Hong Kong Customs and Excise Department (license number 16-09-01929). Additionally, Airwallex is regulated by financial authorities in key markets, including Hong Kong, the UK, the US, Australia, and more. These regulatory frameworks ensure all transactions adhere to strict compliance standards. To further enhance security, Airwallex implements robust safeguards such as multi-layered identity verification processes and two-factor authentication, ensuring customer data and financial transactions remain secure. These measures provide users with confidence and peace of mind for every transfer.

In addition to its speed and security, Airwallex offers a cost-effective alternative to traditional banks and other remittance platforms. With transaction fees as low as 0.2% above the interbank exchange rate, Airwallex provides users with access to competitive rates while eliminating unnecessary intermediaries. This approach minimises costs and ensures full transparency – users always know the exact fees and exchange rates before completing their transfer.

How can I transfer money back to Hong Kong from other countries?

Transferring money from other countries to Hong Kong is a straightforward process, thanks to the wide range of financial services and technologies available today. Here's a breakdown of the most common methods and steps involved:

1. Bank transfers

Bank transfers are one of the most reliable ways to send money to Hong Kong. You can initiate an international wire transfer from your bank account abroad to a bank account in Hong Kong. To do this, you’ll need the recipient's account details, including the bank's SWIFT code, account number, and the name on the account. While secure, bank transfers can be costly due to high fees and may take a few working days to process.

2. Money transfer services providers

Platforms like Airwallex and PayPal offer a faster and often cheaper alternative to traditional banks. These services typically provide better exchange rates and lower fees. To use them, you will need to set up an account, and provide the sender with your account details.

3. Western Union 

For those without a local bank account, Western Union allows cash pickups in Hong Kong. You can send money online or from physical locations abroad, and the recipient can collect it in Hong Kong by providing a unique transaction code along with identification.

4. E-wallets

If both you and the recipient are using international versions of apps like Alipay or WeChat Pay, you can transfer money directly through the platform. The recipient can then transfer the funds into their Hong Kong bank account.

Before transferring money, always compare fees, exchange rates, and transfer times to select the most cost-effective and convenient option.

Advantages of using Airwallex to receive money from other countries

Users can receive foreign currencies in over 23 different currency accounts on the platform, without the need to open a bank account at a local branch. This makes it ideal for businesses with global operations.

If a user wants to receive payments from Singapore to Hong Kong, they can open a Singapore Dollar account in their company's name with Airwallex. This account includes local bank details, branch codes, and a dedicated account number, allowing funds from multiple countries or regions to be directly transferred into their Airwallex account with no transaction limits and forced conversions.