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Best Ways to Pay International Contractors
Over the last 20 years, the business world has gotten significantly smaller, thanks to the internet and technological innovations that make it easy to conduct business overseas. When it comes to business, it's fair to say the world no longer has borders. With a data connection and the right internet tools, people can conduct business anywhere they want from their home offices.
With the ability to easily transact business across borders, the need for solutions to pay international contractors, vendors and employees is increasing everyday. What business owners are looking for is ways to transfer cash as efficiently as possible to avoid interrupting the business cycle. If you are looking to do business on an international level, you will eventually need reliable ways to make payments. The discussion below will address the best options available today.
One of the primary reasons why businesses like to use contractors in other countries is it solves a lot of financial issues. If you are running a business in the US, both labor and materials are going to run significantly higher than those costs would be in other countries outside the US. As a responsible business owner or manager, you need to save money wherever and whenever possible.
Of course, you are going to have to pay for the goods and services you get from abroad. In line with being that responsible business owner or manager, you should be looking for the most efficient and least expensive ways to pay your contractors abroad. The following are some suggestions.
People have been making payments by direct deposit for decades. These are basically ACH (Automated Clearing House) transactions that move money from one bank account to another. Yes, direct deposit payments can be made internationally as long as the recipient can provide a banking routing number and a bank account number.
The good news is direct deposits are quite affordable, as little as $1 USD per transaction. Unfortunately, direct deposits usually require at least one business day for transmission. If you are making regular payments to a contractor abroad, this is a terrific solution as long as the money does not need to reach its destination immediately.
Believe it or not, people still write checks to make payments. In lieu of checks from one's bank account, a money order issued by a bank is also a viable payment alternative for international payments. However, there is a major drawback with this option.
Check deposits made in foreign bank accounts can take days and even weeks to clear. Your contractors would literally be at the mercy of their respective banks. While the cost of this payment option to you would be no more than a postage stamp, you contractors had better have patience.
Everyone tends to think of third party cash transfers as a payment option reserved for individuals. The truth is payment services like Western Union can also be used to pay contractors. There may be limits on the size of transfers you can make, but this is a viable international payment option for your international business.
One of the really nice benefits of using a money transfer service is most of them have a send money app. That's correct. You can literally initiate payments to your contractors abroad in a matter of minutes over your mobile device from anywhere at any time. In almost no time, your contractor could be walking out of a payment service office in their community with cash in hand. What a great way to keep the business process flowing.
In late 2017, MasterCard launched a digital money management system called MasterCard Assemble. The platform allows users to combine many aspects of their financial lives onto a single platform. One of the services available through MasterCard Assemble is money transfer capabilities. It's not the most economical money transfer option, but it is proving to be fast and efficient.
For now, these are your best options for paying contractors abroad. If you stay tuned, it's very likely that new innovations will be coming to market to make the international payment process more efficient and affordable.