The ultimate guide to paying overseas suppliers from Singapore

Working with overseas suppliers and employees drives innovation and sharpens your competitive edge. It also comes with some operational challenges, especially when sending cross-border payments in USD, CNY, and other major currencies. Currency conversion and transaction fees can erode your margins and offset savings gained from your global workforce.

In this detailed guide, we'll explore different international payment options and how to choose the right one. We’ll also share how the Airwallex multi-currency business account can help streamline your overseas transfers and cut down on costly fees.

4 factors to consider before paying overseas suppliers and employees

Whether you’re sending money to suppliers in China, offshore teams in India, an overseas vendor or contractors in the United States, some factors that can help you choose the right payment method:

Currency of payment

Suppliers prefer receiving USD or their local currencies, which has a direct impact on your costs. A multi-currency account can help you minimise foreign exchange risk, as it lets you hold various currencies.

Transfer fees

These are usually a percentage of the amount you’re sending, plus a fixed fee. Compare fees and choose a payment provider with a transparent fee schedule. 

Frequency and volume of payment

Are you making a one-time or recurring payment? Are you paying a few suppliers or large offshore teams? Look for payment methods that offer batch transfers and scheduled payments.

Speediness of transfer

Cross-border payments are prone to delays. However, payment specialists like Airwallex also use local payment networks, allowing you to send overseas payments as quickly as one business day. 

Top methods to pay overseas suppliers from Singapore

Here is an overview of some popular payment methods to pay suppliers in USD and other currencies with their benefits and cons.

Bank transfers

A bank wire transfer is an electronic method of transferring funds from one bank account to another. 

Pros:

• Straightforward process. Simply enter your recipient’s bank details into your online banking platform.

• Universality. Bank transfers are widely accepted and are often the standard for international payments.

Cons:

• Cost. Bank transfers can be expensive, with fees for both the sender and recipient, especially when currency conversion is involved.

• Exchange rate markup. When exchanging currencies, banks often charge a small fee to cover costs and generate revenue. This can reduce the actual amount received or increase the amount sent.

• Speed. Bank transfers can take several working days, which may not be ideal for time-sensitive transactions.

Fintech payment specialists

Payment specialists like Airwallex are a type of fintech firm that focuses specifically on streamlining local and international payments. They use proprietary software and automation to facilitate quicker, more cost-effective, and often more user-friendly ways of transferring money across borders. 

Pros:

• Lower fees. Fintech firms have fewer overhead costs, resulting in lower fees and more favourable exchange rates compared to banks.

• Faster transfer times. Because of their partnerships with local payment networks, fintech can process international payments as quickly as 1 business day.

• Ease of account opening. Fintech accounts can be opened from anywhere - as long as you have soft copies of your business documents and valid IDs.

Cons:

• Limited physical presence. A lack of physical branches can be a drawback for those who prefer face-to-face interactions.

• Variable customer support. Many fintech firms offer text and phone support, which can impact the quality of support and issue resolution. 

Peer-to-peer currency transfers

A P2P service lets you transfer foreign currencies directly to an individual, through a third party company or mobile app. When you create an account on the P2P platform, you need to link your bank account, credit card, or mobile wallet. 

Western Union and PayPal are examples of P2P remittance services.

Pros: 

• Cost-effective. Some P2P services offer lower fees and better exchange rates compared to traditional banks.

• Global reach. P2P platforms often have a wide international reach, which makes them ideal for sending payments to different banks. 

Cons:

• Low transfer limits. P2P services impose low transfer limits, ranging from SGD 1,000 per day to SGD 30,000 for every 365 days. This makes them an impractical method for supplier payments or employee salaries. 

• Both parties must use the same platform. Your recipient must also create an account with the P2P provider and go through their KYC process. Opening an account adds to your overseas team’s administrative work. 

• Limited business features. P2P platforms facilitate payments only, and do not include time-saving features like bulk transfers or payroll. This makes it unsuitable as a long-term solution for businesses.

Corporate card 

Corporate cards separate business expenses from personal ones, and can be used as company or employee cards. They’re ideal for small expenses like travel or Facebook advertising fees in USD.

Pros: 

• Convenience. Corporate cards offer a quick and easy way to make payments, especially online.

• Rewards. Many cards provide rewards like unlimited cashback or miles for every transaction. 

Cons:

• Low acceptance rate. Not all suppliers or employees accept credit card payments, especially in markets like mainland China.

• High transaction fees. Corporate cards may incur high foreign transaction fees, increasing the overall cost of payment to overseas parties.

• Unfavourable exchange rates. Although corporate cards automatically handle currency conversion, the exchange rates are less competitive than specialised forex services.

• High credit card interest rates. Corporate credit cards’ balances must be paid in full and on time. Otherwise, high interest rates and late fees can accrue.

How to choose an international payments provider for your business

When choosing a payment method, examine their fee structures, transfer speed, and security measures. 

Compare fees and exchange rates

There are many costs to international supplier payments besides transfer fees. These hidden fees may seem insignificant but over time, they quietly inflate the cost of each transaction:

• Intermediary bank charges. International payments pass through multiple intermediary banks before reaching their final destination. Each bank takes a small percentage of your funds in exchange for facilitating your payment.

• Currency conversion costs. Mark-ups are often added to the exchange rate, which can inflate costs for recurring transactions like employee salaries.

• Transaction fee structures. Some providers charge a flat fee or a percentage; others do a combination of  both.These seemingly small differences in fees can add up, especially for large or recurring payments.

Assess payment speed

Transaction speed is more than a convenience; it's critical to your business’s operations. Slow payments can lead to delayed shipments for contractors, all of which negatively impact your performance and reputation. 

For time-sensitive overseas transactions, look for payment providers known for speed. Otherwise, find out your provider’s average delivery time for the markets you transact with. 

Review their security measures 

Platforms with robust security features protect your business from potential fraud and financial losses. Here are some security features to look out for:

• Encryption. Encryption methods like SSL (Secure Socket Layer) or TLS (Transport Layer Security) scramble the data exchanged between you and the payment provider, which makes it unreadable by any unauthorised parties.

• Tokenisation. Where encryption scrambles data, tokenisation swaps sensitive data with a unique code or “token”. This token cannot be read by anyone else except its intended recipient, who has a “key” to unscramble the token. 

• Two-factor authentication (2FA). 2FA reduces the risk of unauthorised access to your business account. After entering your password, 2FA asks you to verify your identity through a second method, usually through a code sent to your phone. 

• Licensed to operate. A licence is a stamp of approval by local financial authorities, indicating that the provider adheres to legal, security and operational protocols. In Singapore, Airwallex is licensed by the MAS as a Major Payment Institution.

4 additional ways to streamline payments to overseas employees and vendors

Issuing multiple international payments can be an administrative headache that increases the risk of errors and delays. Here are some ways you can turn this task into a streamlined process.

Agree on the currency of payment

Before the work begins, agree on the currency of payment. This helps you with financial planning, reduces administrative complexities, and fosters transparent business relationships. 

When you know what currencies you’ll be paying, you can minimise currency conversion costs by using a multi-currency business account. With this you can send, receive, and hold your most traded currencies and avoid unnecessary conversion fees.

Ensure you have accurate account details

Double-checking account details prevents small errors that lead to delays or the funds ending up in the wrong place. 

• Beneficiary information. This includes the recipient's full name, account number, and address. Accurate beneficiary information ensures that the funds reach the intended recipient without any issue.

• Financial institution codes. Codes like SWIFT, IBAN, and routing numbers ensure that your payment makes it through the international banking system. A missing or incorrect code could mean your payment gets lost or delayed.

Automate recurring payments 

Recurring expenses like monthly salaries or software licences can be streamlined through automated payments.  Besides freeing up your team from repetitive tasks, automation reduces errors and ensures money is sent regularly and without delay. 

Use bulk payments

Need to pay hundreds of vendors and employees? Instead of initiating each transaction individually, use batch transfers to save time by consolidating multiple transactions into one.

Simplify global payments and payroll with the Airwallex Business Account

If you need a fast, cost-effective way to send global payments, the full-featured Airwallex Business Account is your answer. Our FX Transfers and Bill Pay services have everything you need to streamline payroll or settle multiple invoices, allowing you to focus on what you do best – growing your business.

• Real-time, market-leading exchange rates. Airwallex gives you access to interbank exchange rates - the forex rates banks use to trade currency, minus the hefty 4-6% markup.

• Send fast payments to 110+ countries. Airwallex’s vast global payment network is connected to local payment rails and clearing systems, such as Fedwire in the USA or FPS in Hong Kong. This means payouts can happen as quickly as 1 business day, without the high fees imposed by banks.

• Send batch transfers for up to 1,000 recipients across countries, currencies, and transfer methods.

• Tight security and controls. Stay within company spend policies with security features like custom approval workflows. Set specific roles to employees so that the right people approve each payment.

• Automate bookkeeping with accounting integrations. Connect Airwallex to accounting software like Xero, Quickbooks, and Netsuite, in just a few clicks and save time on manual reconciliation.

How to pay overseas suppliers with Airwallex

Ready to tackle international payments with ease and efficiency? Follow these steps to sending overseas payments and payroll with Airwallex:

• Step 1: Create a free Airwallex Business Account and verify your business 

• Step 2: Add funds to your Airwallex account using direct debit or bank transfer

• Step 3: Enter your recipients’ banking details and create them as a Contact

• Step 4: Enter the currency and amount. Real-time FX rates, fees, and transfer fees will show you precisely how much it costs.

• Step 5: For batch transfers, download the batch transfer template. Enter your recipients’ details and upload it back into Airwallex. 

Related articles about managing your business operations:

• Compare the best business bank accounts in Singapore for 2024

• How to open a business bank account in Singapore

• Do I need a business bank account?