Accounts payable professional executes cross-border payments

The Complete Guide to Cross-Border Payments and AP Automation

Companies that pay suppliers abroad can leverage accounts payable (AP) automation to complete both domestic and cross-border payments in one place, decreasing the time and money spent on payment processing.

In this blog, you will learn about cross-border payments including its history, definition and the benefits it can provide organizations.

What are cross-border payments?

Cross-border payments, also known as international payments, are payments made by either an individual, company or bank where the payer is in one country and the receiver is in a different country.

The most common type of cross-border payments are international money wires via online bank portals.

These payments can be complex to process because of the large influx of sensitive payment information shared between companies. This information includes payment status, delivery date, quote information and other crucial data related to a specific payment.  

How do cross-border payments work with AP automation?

It can be a lengthy process to complete cross-border payments if your company doesn’t have an integrated AP solution that can execute both domestic and cross-border payments.

AP staff would have to enter payments into multiple systems, account for changes in exchange rates and manually reconcile invoice and payment amounts, which is inefficient and time-consuming.

For example, if your business has to make a payment in Euros, you would log into an online bank portal, make the payment, account for fees/exchange rates and then go back into your enterprise resource planning (ERP) system to input the payment where you would have to manually reconcile it.

If your organization is not using a bank portal, you could use an online money transfer platform or transfer funds directly, enter in the same type of payment, and then go back into your ERP, manually enter the payment and reconcile the accounting.

After an organization adopts AP automation, AP professionals can process cross-border payments all in one place and with greater accuracy.

Rather than using the bank portal, entering a payment amount and then entering the same amount into the ERP and the back-end accounting books, AP professionals can process cross-border payments in one centralized location. 

Benefits of using AP automation to manage cross-border payments

1. Improved control, convenience and transparency

By allowing companies to initiate cross-border payments using the same platform and experience as their domestic payments, AP professionals can truly manage the entire AP process in one place. 

It helps to look for a cross-border payment system that can do the heavy lifting for the organization, such as automating the whole international accounting process, including foreign exchange fees, gains and losses.

Businesses can benefit from greater transparency into their costs from the start, including access to data about purchase orders.

2. Accessible data and building trust with suppliers

With an AP automation solution, organizations can use search features to quickly and easily find material receipts, purchase orders and invoices.

And by having the ability to make cross-border and domestic payments all in one place, AP staff can be aware of the status of payments, payment amounts and payment delivery estimates, ensuring suppliers nearby and abroad have been paid on time, while also helping to prepare for audits.

The purchasing data can provide companies with the tools they need to make informed decisions about areas to save on spending and increase productivity.

3. Cost savings and efficiency

Paperless bill payments mean that businesses can save money by reducing the need for check printing, envelopes, postage or international wires.

Due to the vulnerability of paper checks and envelopes being misplaced during transit, there is also a strong need for increased focus on financial security.

4. Maintaining strong supplier relationships

Nothing is more important to suppliers than your ability to pay them accurately and on time so they can continue the chain of payments to their suppliers, and so forth.

One kink in the chain, such as a late payment, could mean your suppliers might not be able to make payroll, which could add a great deal of unnecessary tension to a delicate relationship. 

Regardless of whether a supplier is local or in a different country entirely, companies need to do everything they can to guarantee suppliers will receive an accurate payment.

Using software that accommodates cross-border payments increases the supplier’s trust because it provides assurances that the supplier will get paid quickly and in the correct amount.

Finding a partnership you can trust

When evaluating AP automation partners to help with your cross-border payments, check the depth of the relationship they have with your ERP software, including: 

These variables will help ensure your AP and payments – cross-border and domestic – are in good hands.

Learn more about AvidXchange’s relationship with NetSuite, including cross-border payment capabilities.

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