In an increasingly digital world that supports digital payment systems, many business owners and finance managers have started to send money via wire transfer services directly. As opposed to traditional methods like cash, balance transfer checks, or money orders, a wire transfer is faster and more secure than physical mail. Moreover, wire transfer services can also be an easy way to keep track of transactions as almost every service comes with a transaction history. Business owners and finance managers should understand the different strengths, weaknesses, and costs associated with wire transfer services before they begin to use one for their business. Here are five requirements that must be understood before a business starts using a wire transfer service.
The Sender And Receiver’s Information
Any wire transfer service has a set of information that they will require from each party. The first piece of information that a business owner or finance manager will require is two routing numbers, one for their own account and the receiving party. After that, they will also need the Society for Worldwide Interbank Financial Telecommunications (SWIFT) code. Finally, they will need the full legal names of each party in the transaction. Financial managers should be careful to double and triple check this information for accuracy as even a small discrepancy can cause the entire transaction to fall through.
Costs And Fees
Like any service, a wire transfer service has a fee associated with its usage. Most mainstream domestic wire transfer service fees range from as low as 0.5% to as high as 5% of the money being sent. For international services, the fees are generally higher as the money has to be routed further, and often converted into the local currency. Some wire transfer services charge a fee just to convert the currency in addition to the wiring fee. Ideally, you should try to avoid wire transfer fees when possible. Otherwise, you should plan ahead to account for these additional expenses in payment.
Sending Money In Regular Intervals
For many business owners, money transfer services are being used not just to pay for goods and services, but also to service payroll. Thus, some modern wire transfer services allow users to set up spreadsheets of repeatable, regular transactions. For any business with salaried workers, this can make the process of paying them easy and hassle free. Additionally, you can use this service to set up regular payments with bulk product providers. For example, if a small restaurant signs a contract with a local produce seller, they can set up the entire contract’s worth of payments in the first week. A lot of the manual aspects of running a business can be automated, taking the strain off the financial bureaucracy of the company.
Use A Bank Account Transfer Service
Generally speaking, there are two main categories of wire transfer services, peer to peer services and bank account transfer services. For a basic bank account, almost all transactions are peer to peer. This means that a consumer transfers money into an intermediary service from their bank account. Then, they transfer that money to another consumer’s intermediary service. This is fine for consumers, but often these services will have higher fees and lack higher level features for businesses. Bank account transfer services wire money directly from one bank account to another, using a bank’s internal infrastructure. While these services may have small delays in payment, the lower overall transaction fees mean that they scale better. Business owners looking to save money on wire transfer services should avoid peer to peer services.
Delivery Time Range
Certainly, wire transfer services require a standard time to acquire, send and release funds to the receiving party. Especially for businesses, delivery time can significantly impact inventory purchases, shipments and contractual agreements. Timing is so important to the transfer service and the company. Therefore, you will need to schedule some time for the transfer to complete. Sometimes, delays can occur between countries, exchanging currency or on the receivers’ end. While most international money transfer services take 2-3 days standard, there are some providers that offer 24 hour transfers. This might pay off for businesses working on a deadline. However, it could prove costly on amounts over $10,000 to $1,000,000 in transfer. Satisfy this requirement by planning your funds transfer with enough time to reach the destination.
Wire transfer services can be important for businesses trying to move money around domestically and internationally. Every service requires certain key information from the party sending and receiving money. Business owners and finance managers should understand the costs and fees associated with the service that they’re using. They should also try to use a service that allows them to send payments according to a regular schedule. This is mainly for consistency purposes. If possible, use a bank account transfer service instead of a peer to peer service since it comes with lower fees. Finally, wire transfer isn’t instant and business owners should take any delays in payment into account. Understanding all of these principles allows business owners and financial managers utilize wire transfer services effectively.