For many successful small and medium-sized businesses based in the UK, the dream is to expand into the international market. With foreign exchange and international payment services like NewbridgeFX, achieving this goal arguably is easier than ever before. But there’s still much to take into consideration, such as the costs of doing business internationally.
In this guide, we offer an overview of the most common costs in doing business abroad, including transportation costs, production costs, cross-border payments, tariffs, exchange rate considerations, delays in delivery, and transfer fees.
Transportation costs
Regardless of the size of your business, you should take transportation costs into consideration. The freight forwarder you choose should also be able to offer you sound advice regarding documentary, regulatory, and other requirements associated with doing business overseas, at least as far as freightage is concerned.
As it’s essential to have the right balance between service quality and cost, choosing the cheapest provider you can find is not the best option. A NewbridgeFX account can help you to pay your preferred freight forwarders with ease.
Production costs
Production is one of the costs of doing business internationally which can affect your business’s cashflow and daily operations. This especially is the case if you need to increase your capacity, increasing both your business’s production and service costs.
When planning your expansion to take advantage of the benefits of doing business internationally, ensure you have sufficient resources to make the leap before your business starts seeing the projected returns.
Cross-border payments
The fluctuating foreign exchange rates, foreign exchange fees, and transaction costs involved in cross-border payments are also important costs to consider when thinking about doing business abroad. These costs potentially can make a significant dent in your profits.
This is why it’s important to find a payment service provider, such as NewbridgeFX, that offers better-than-the-bank exchange rates, multicurrency merchant accounts, and other products which make it easier to make and receive payments internationally.
Tariffs
Although most tariffs apply to those who purchase imported goods, some tariffs do apply to exporters. These costs are part and parcel of doing business overseas. Import tariffs can make your products unattractively expensive in foreign markets, which can make it difficult for your business to compete with local suppliers and possibly even force you to change your pricing structure.
If your operations involve dealing with suppliers based in other countries, you’ll be faced with increased costs due to the tariffs you need to pay on goods entering the UK. This is why it’s important to look for opportunities in markets with favourable trade agreements.
Exchange rate considerations
Exchange rate fluctuations are one of the risks of international business. Too many SMEs that expanded abroad have learned the hard way that exchange rates can change before the funds they’re sending to recipients reach their destination. If the exchange rate drops, the recipients will receive less than the amount of money you intended to send to them.
Prevent this from happening to your business by exchanging currency before making an international payment. You can do this easily by registering for a business account with NewbridgeFX.
Delays in delivery
No one wants their business to be slowed down by lengthy payment transfer times or delays in funds being received. With NewbridgeFX, your payments will be settled the same day, allowing your business to keep moving. Some of the more traditional methods of transferring money internationally can leave you stuck with a two to five day average settlement time leaving you or your suppliers short of cash and putting deals on hold. To operate an international business in today’s market, immediate or same day transfer settlement is the only way to go.
Transfer fees
Some SMEs that have recently expanded into other countries do not check transfer fees. While most businesses are aware of the flat processing fee known as a service, transaction, or transfer fee that banks and some forex specialists charge, they do not consider conversion/exchange fees, third-party or intermediary bank fees, and receiving fees.
You can avoid becoming a victim of these costs of doing business internationally by registering for an account with NewbridgeFX and taking advantage of international business payments with no fees.
Sign up for a business account with NewbridgeFX
Without proper preparation, you might find that the costs of doing business internationally can scupper your plans of expansion. Approach doing business abroad the sensible way. Sign up for a NewbridgeFX business account.