Whether you’re running an eCommerce business or outsourcing work to contractors and freelancers, you’ll need a robust approach to make business payments. It’s important to find a business payments solution that is low-cost, has short processing times, and is convenient for you and your suppliers. Here are seven ways to make business payments in 2018.
1. Bank transfer
Your bank is the first place you turn to for business finance and business banking, but it’s not necessarily the best choice for business payments. Bank transfers are either expensive wire transfers, like SWIFT transfers, or use ACH or other EFT processing which can take several days.
In today’s world of international payments, you need freelance payment options for paying overseas contractors who bill you in a different currency. Although your bank can handle any foreign currency you need, it will also charge you currency exchange fees, and there’s no guarantee that you ’ll get a good rate of exchange. In short, bank transfers can be an expensive choice for business payments even if they are convenient.
Even in this digital world, checks are still useful for business payments. When you pay by check, you can keep a reliable record of your transactions, and you can cancel a check payment as well, if necessary. The trouble is that it costs to pay by check – between $6-9 each time. Checks take a long time to write out manually, so they aren’t a good choice for high volume business payments.
That said, if you use an accounting system like QuickBooks that allows you to print checks, and incorporate the payments directly into your accounting system, you might find that checks are still worthwhile.
3. Credit cards
Business credit cards can be a lifesaver. Almost everybody accepts credit cards, and they give you a way to pay your business payments even if cash flow is a little stuck. However, they shouldn’t be your first choice for business payments. If you need to make an international payment and change money into a foreign currency, you’ll have to pay certain fees and, more often than not, an unfavorable exchange rate. You might also find that not all freelancers accept credit card payments. Usually, suppliers that do use an app, and you might have to pay the app’s payment processing fees too.
ACH payments – also called Automated Clearing House payments – are a type of electronic payment. ACH payments are one of the lower-cost business payment options, with an average cost per payment of $0.25-$3. You can use ACH for business payments in the US, as long as you don’t mind that they’ll take between two and four business days to clear. However, you can’t use ACH for payments outside of the US.
Electronic Funds Transfer (EFT) payments are an easy business payments option. You can manage EFT payments through your bank, or through a different payments provider. EFT payments can be made internationally, so you can pay contractors who are based overseas, and they can also handle foreign currency exchange.
Unfortunately, EFT payments take a while to process – around two to four business days, on average, which might not be fast enough for your needs. If you aren’t going through your bank, you’ll need to set up an EFT payment processor, which could be a complicated process, and pay a flat monthly fee as well as a fee per transaction. The cost of EFT payments can vary widely, from $0.25 per transaction to over 3% of each amount transferred. As you might expect, EFT payments in a foreign currency incur the highest rate of fees.
6. Online payment services
With the rise of the gig economy, we’ve also seen the growth of digitalfreelance payment methods. You can choose between various online digital payment services, including mobile payment options like Apple Pay. Many online payment services offer better rates and lower fees than bank transfers, but it’s important to read the small print carefully – sometimes you’ll end up paying more than if you went through your bank. Not all payment services cover the currency or country that you need, either.
Most payment services allow you to link your bank account or your credit card so that you’ll make a local transfer or payment to the payment service, and then leave it to the company to complete the international transfer and foreign exchange. PayPal was the first to present this service, but it’s no longer the popular choice for business payments to freelancers and contractors because of the high fees.
Payoneer is an advanced, secure digital payments provider, and is one of your best options for business payments to freelancers, contractors, and suppliers. If you make in-network payments to another Payoneer member, you won’t have to pay any fees, and within about two hours the payment will be processed.
With Payoneer, you can also choose to pay through a bank transfer, credit or debit card, or use an eCheck, but you won’t need to pay high foreign currency exchange fees or accept a high exchange rate. You’ll be charged a maximum of 3% for credit or debit payments, and between 0% and 1% for eChecks or bank transfers. Payoneer uses multiple security levels to protect your transactions, and you can track it all the way to the recipient’s account. Payoneer is both a domestic and an international business payments solution, operating in over 200 countries and regions around the world, and in all major currencies.