Deciding how to pay international employees is a common challenge that business owners face.
Fortunately, there are a number of cost-effective solutions that you can choose from…
These solutions range from using business-focused fintech platforms to opening a UK company bank account as a non-resident and accessing local currencies.
Of course, the solution best suited to your company will ultimately depend on where your company is registered, the shareholder and director profiles, where your employees are located, and the currencies involved.
In this article, we’ll discuss some of the available options to pay your international employees and how you can start opening accounts today.
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Table of Contents:
Paying International Employees
In most cases, if you’re looking to pay international employees, you can send international wire transfers from your company’s primary bank account at a brick-and-mortar bank.
But, there are a few problems with sending traditional wire transfers this way…
- High fees are charged to your company for sending international wires
- High fees are charged to your employees for receiving international wires
- High foreign exchange fees for currency conversion
- Chance of transfers being “lost” by correspondent banks
- Transaction reviews by compliance can delay transfers
How to Pay International Employees
With the above in mind, we typically suggest considering the following options as an alternative to using domestic banks to pay international employees:
Option 1: Fintech + Domestic Bank
If your business is paying international employees on a regular basis, you should (at the very least) look at using fintech platforms that specialize in cross-border transactions.
This approach can dramatically reduce the amount that your business has to pay in international wire fees and often includes better foreign exchange rates if you are paying in foreign currencies.
Additionally, it’s worth noting that most platforms offering these services do not have monthly fees, are relatively easy to set up, and offer a better user experience than many traditional banks.
However, if you want to take your business to the next level, save even more money, and get the best FX rates possible, you may want to consider the following option instead…
Option 2: Fintech + International Bank + Domestic Bank
If your company has international banking requirements, like paying international employees in foreign currency, then this option is for you.
In short, companies that engage in international transactions on a regular basis are exposed to foreign currency risk. This is true no matter where your company is located or which currencies it uses.
To reduce the risk of currency fluctuations, many companies opt to hold all of the currencies that their business uses on a regular basis.
For example, if your business has employees located in the US, Canada, the UK, and Germany, it might have regular expenses in USD, CAD, GBP, and EUR.
Unfortunately, depending on where your company is registered, a domestic bank account might not provide access to these four currencies (or do so at reasonable rates).
Instead, you may need to consider opening an international bank account in a third country that offers multi-currency accounts at more competitive rates.
Of course, you could then pair this with your domestic account and preferred cross-border transaction solution in order to reduce the costs associated with sending and receiving funds further.
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Frequently Asked Questions
Below are three of the most common questions we receive from people trying to determine how to pay international employees. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
How Do I Pay an Overseas Worker?
To pay an overseas worker, you can either send an international wire directly from your domestic bank account, use a cross-border transfer service, or send transfers in local currency from an international bank account.
Will I Be Charged Transaction Fees When Sending Money Internationally?
Yes, most banks charge higher transaction fees when sending money internationally. It’s important that you confirm the fees that your bank will charge before sending a wire. These fees are often three to five times higher than sending money domestically.
Can I Use My Bank Account to Pay International Contractors and Suppliers?
Yes, domestic bank accounts can be used to pay international contractors and suppliers. However, the fees that banks charge often make it costly to do so. Instead, business owners typically use a cross-border transaction platform or an international bank account in order to send transfers more cost-effectively.
Ready to Explore Your Options?
If you would like assistance navigating your banking options at home or abroad, we can help.
You can access GlobalBanks IQ, our international banking intelligence platform, in just a few clicks. Unlock our bank database, individual bank profiles, account opening strategies and reports, banker scripts, and more.
But, if you want a 100% personalized account opening service that taps into our team’s expertise and provides direct banker introductions, you can get started with GlobalBanks Insider.
Of course, if you have any questions, please get in touch with us directly.
