It has never been more crucial for UK businesses to find the right overseas suppliers. With the Brexit transitional period coming to a close and EU relations still uncertain, experts such as KPMG have advised businesses to diversify their supply chains for better resilience.
Find out how to assess the potential of an overseas supplier and which tools you may need to successfully manage the relationship.
Assessing overseas suppliers
We have already identified several alternative markets for businesses to consider in the aftermath of Brexit, some of which have already signed trade deals with the UK. Here are some key points to consider when assessing your options in each of these new markets.
Product volumes available
Some countries may have access to much larger volumes of product than local suppliers, due to landmass or the indigenous climate. If you’re looking for large quantities or want to buy in bulk to help reduce costs, overseas wholesale suppliers might offer you a better deal.
Value for money
Value for money isn’t necessarily all about the cost of the goods per unit — it also relies heavily on the exchange rate of the currency you’re buying in. Working with a foreign exchange provider will give you access to rate tracking tools and will help you protect the value of your pound with specialised services such as spot contracts, forward contracts and market orders.
The best way to pay overseas suppliers
The payment terms of potential suppliers can significantly affect your business cashflow. Some overseas exporters ask for advance payment and others may ask for payment on delivery via open account transaction.
Currency can shift drastically in the course of 24 hours but an FX order could counteract this by automatically paying overseas suppliers once a desirable rate is reached. This is particularly useful for agreements with 30-day payment terms or longer.
Supply chain and environmental impact
Your choice of overseas supplier may also depend on the complexity of the supply chain and whether it's cost-effective. Overseas logistics can also affect the size of your business’ carbon footprint, so be sure choose wisely.
The strength of the market you’re buying from can affect the deal you’ll get on your goods. In 2020, the pandemic has affected the strength of almost every market and each has a different rate of recovery, so it’s particularly important to explore this before you commit. An overseas payment provider can give you access to a dedicated account manager who will identify areas of risk within currency markets and will guide you on how to manage it.
Establishing a smooth process
Selecting an overseas supplier is only half the work. To get the most out of the partnership, you'll need to equip yourself with the right tools for overseas payment processing.
Be sure to familiarise yourself and your business with how to pay an international invoice ahead of making any agreements with new suppliers. Ensure you are aware of the tax rate for exports in that particular country and learn how to file the VAT after paying international suppliers.
You can keep things running smoothly by opting to use an overseas payment platform specifically designed for business use. A moneycorp business account can support international payments in 120 currencies worldwide, offering 24/7 access to your online multi currency wallet.
The size and urgency of each payment can be managed with a variety of specialist payment solutions, which help protect against losses caused by market movement. Balance transparency will improve cashflow management and currency tools could minimise your risk exposure.
If you’d like help assessing international markets and identifying global payment solutions for your business, contact our currency exchange specialists today.