Three tips for navigating global payments as you expand internationally

In an increasingly global and interconnected world, start-ups are moving fast to expand internationally.

Managing global payments can present challenges to rapid-growth start-ups

Branching into new markets provides huge opportunities to grow your customer base and build new revenue streams, but it also brings serious challenges if you are trying to manage payments across buyers, suppliers, and customers on a global scale. In periods of uncertainty, industry winners are made. This is the time for growth-minded companies wanting to pursue a global strategy to separate themselves from average competitors.

Volatility around foreign exchange rates and rising inflation and transaction fees, coupled with ambiguity around where and when your payment will be received and processed, makes for a tricky environment for any business, especially early-stage ventures seeking rapid growth. While C2B payments have undergone huge innovation in the last decade, the same cannot be said for B2B payments. This can result in significant hurdles for start-ups seeking to grow their international footprint.

Traditional banks and financial institutions often lack the agility to manage rapidly changing situations. Larger banks continue to focus on large enterprises, while Tier 2 banks are not always willing to allocate the required resources to deal with complex foreign exchange solutions. In a world of uncertainty, swift and flexible decision making is essential for all companies to service their clients and partners globally. Whether you’re a small start-up or a larger corporation, access to key market insights is a necessity. The ability to take informed decisions that both mitigate future risks, including foreign exchange risk, and safeguard future growth ambitions is essential.

Here are three global payments tips so you can focus on growth and keeping your customers happy.

#1: Expect the unexpected – economic volatility is here to stay

Tumultuous global events, from the pandemic to the ongoing war in Ukraine, should have taught us all to expect the unexpected. These shocks to the global order cause huge challenges for businesses trading internationally. It’s safer to presume there will be more disruptions to the global economy in the years to come, and to plan accordingly.

Cash flow is the number one reason small businesses go under. This risk increases in an environment where currency fluctuation can shrink profit margins and detract from your bottom line. Interest rates anchor the value of exchange rates. So, when you see seismic shifts in interest rates, or expectations of future interest rate changes, you then tend to see a surge in currency volatility.

Currency volatility increases the uncertainty related to international payments and currency conversion – especially when you are trying to make decisions now that will impact your business in the long run. Identifying a payments partner with deep payments industry expertise and a range of currency solutions will help keep your business moving forwards through times of uncertainty.

#2: Do your homework or have someone else do it for you – foreign exchange and currency risk management

We’re experiencing a global supply chain evolution as challenges like shortages and disruption to transportation require new adjustments to meet demand. That means that businesses are going to examine the commercial agreements and deals they make to ensure they’re making choices that will benefit and ease the impacts of changes to the supply chain landscape. Rapid decisions may be favourable versus long, predictable, multi-year relationships.

To focus on servicing your clients and partners globally, you need to make decisions in a matter of hours and have the ability to pivot to a new supplier or partner quickly. So, you need to know you can act on a payment decision right away. If you’re dealing on a global scale, payment and FX are two parts of the same coin.

Staying ahead of the market is critical to building a strategy that enables your business to work across borders while avoiding currency related losses. With the right tools in place, you can identify potential FX exposure risks.

Plan for the unexpected and ensure your payment processes can be adjusted in real time – or as close to it as possible – so you can react quickly to changing circumstances. The aim for your business should be to make an international payment as simple as a domestic one.

#3: Keep up with new regulations – good compliance recommendations will support your growth goals

Managing risk and compliance is increasingly complex for businesses operating internationally. Risk and compliance were traditionally focused on dealing with issues such as fraud, sanctions, and anti-money laundering (AML) provisions. However, its scope now stretches much further to topics such as sustainability markets compliance, ethics, consumer protection, modern slavery, anti-bribery, and corruption.

Each new year brings more legislation, more regulatory bodies, and shifting priorities shaped by regional and global events. It’s a minefield for rapidly growing start-ups. It’s vital, therefore, to be fully conversant with associated regulatory liabilities as well as market findings, consumer feedback, available intelligence, and best practice.

Where possible, you should look to utilise in-house resources to ensure that your business is compliant with both global and regional regulatory requirements as well as helping to mitigate the risks associated with your specific business model.

However, many start-ups in a rapid growth phase may not have sufficient in-house resources to access the best market data to drive decision making. Finding a global partner that can make recommendations not just on payments, but also on regulation, compliance, and global liabilities can help to navigate the complexity and uncertainty around international transactions. Transparency and predictability are essential to scale and achieve your growth ambitions.