Global E-Payment Software Helps Companies Cross Borders and Cash In, Report Finds

A wealth of opportunity awaits in emerging markets around the world, and global e-payment software is helping businesses cross borders to tap into that revenue — and navigate the fiscal risks that can strain supply chains and supplier relationships, according to a report that surveyed more than 400 organizations.

According to the report, 73% of U.S. companies are now making some type of cross-border payments.

But writing a check and sending it to Peru or even relying on wire transfers to far-flung locales no longer cut it with businesses trying to expand globally yet stay profitable. Those methods can be slow, fraught with fraud and take up too much time for a company’s accounts payable department, according to the 2018 report by PayStream Advisors, a research and advisory firm.

People managing supply chains and payments also face increased problems dealing with each country’s regulations and currency, as well as vendors’ preferred methods of payments. The report says accounts payable departments often encounter more costs in fees, time and manual labor to take on the cross-border business. Added risks include violating regulatory requirements that could result in millions of dollars in fines and the costs of late payments, fraud and missed early payment discounts.

“To do cross-border payments right, accounts payable (AP) teams must add in several extra steps and controls,” says Anna Barnett, PayStream Advisors’ lead analyst on this report. “One example is validating payment data accuracy to avoid payment errors. Over 26,000 global rules exist across different regions and payment methods. AP departments must often use multiple bank portals and payment rails to disburse funds across different countries and currencies, and cross-border payments reconciliation typically requires more advanced measures than domestic-only reconciliation.”

But global e-payment systems can mitigate the toll.

“Electronic-payments solutions help streamline the difficult and costly process of making international payments, allowing companies to keep up with global expansion,” says the report, sponsored by Tipalti, a provider of a global payables automation.

International payment management also entails much higher risk than local payments in terms of compliance with international tax and regulatory requirements, the report states. Firms often try to address these issues without beefing up their accounts payable departments.

“Without the use of specialized processes and teams for international and other specialized payments, overall AP operations can suffer,” researchers report. “Even when organizations separate domestic and cross-border payment runs, they still experience pains related to manual processing. Without a solution to help streamline, separate, and manage both domestic and international payments, the process is much more complicated, costly and error-prone.”

That’s why e-payment software can include tools to help manage those problems. Features can make it easier to do early payments — ensuring that any discounts are not missed.

“Leading providers offer early payment capabilities, where suppliers can elect to receive funds more quickly for a discounted payment. With this capability, finance teams receive a referral fee on every dollar paid early, transforming AP from a cost center to ‘AP free’ or even a profit center,” the report says.

In addition to streamlining and supporting supplier onboarding, tax compliance and regulatory compliance, the software can “help manage different international payment methods, including global ACH/local bank transfer, wire transfer, checks, PayPal and prepaid debit card — and allow users to pay in supplier-local currencies, all within one platform … while also instituting payment approval workflows and controls,” it states.

The report also finds that the time saved by e-payment solutions can allow staff to focus on better supplier relationships. And the benefits of shoring up your overseas payments can also improve things at home, researchers say. Domestic accounts payable teams often benefit from using the software’s digital invoices and automated approval workflow tool that allows for rules-based routing, exception management and straight-through processing capabilities.

Researchers even suggest that companies with a small global reach should consider this upgrade to be ready to grow.

“Some organizations may feel that they do not have enough international suppliers to make the adoption of a solution worth the investment,” the report states. “It is important that these organizations consider not only their current supplier payment counts and cross-border payment volume, but where they expect to be in three to five years.”