Why Use an International Online Money Transfer Provider to Pay Overseas Employees and Contractors?
27 september 2019 — 4 min read
Businesses take many different approaches to expanding their businesses internationally:
Manufacturers and retailers may simply expand their distribution into new markets before "setting up shop" in a new region
Service providers (such as Software as a Service vendors) often establish business partner channels to extend their global reach for sales, implementation, and training
Many companies take a "beachhead" approach to expanding into different countries by hiring a country manager and/or a small team of people in a region before investing in buildings and other infrastructure.
Whatever global expansion strategy your company decides on, retaining your relationships overseas is critical to succeeding in your globalization efforts.
Paying offshore employees and contractors through a bank will incur fees and costly exchange rates. Wire transfers or SWIFT transfers (despite the name) can take several days to reach your overseas personnel. XE’s rates are based on live currency market exchange rates, and we offer bespoke services for recurring customers with ongoing international payment needs.
Establishing Strategies for the Full Lifecycle of Overseas Employment
Getting the right individuals in place, who are as committed to representing your corporate brand with the same integrity, passion, and commitment as yours is challenging. Ensuring these remote employees are paid on time, and in full is vital. Just as with your domestic employees, minimizing turnover of your overseas representatives is extremely important.
Many high-growth businesses have one of their long-tenured executives move to a country for a defined period of time to establish a new overseas satellite location, to:
Understand the local culture, and how to best market to the local audience
Interview candidates for sales, service, operations, and executive roles
Learn about compliance obligations, labour laws, benefits requirements and policy best practices. Examples include termination, maternity leave, and conversion of contractors to full-time employees.
Evaluate the local competitive landscape, and identify potential partners in the area which can support your local team.
In many countries, you can't simply pay a local individual from your home payroll system. It is a best practice to investigate the topics above, as well as payroll and tax matters before you even register your business in a foreign country.
Photo by Alex Kotliarskyi / Unsplash
Mitigating Risks Such as Currency Fluctuation and Regulatory Compliance Violation
As an employer, you will have to establish policies around fluctuating exchange rates as they pertain to salary payments and expense reimbursements.
A forward contract or forward option agreement can help shelter your business from turbulent exchange rates.
A forward contract will hold your exchange rates (for a selected currency pair) at a constant for a defined period of time. This is regardless of how your local currency value is relative to the currency of the country you expand your business into.
A forward option gives you the option of trading at a specified rate, or you may transfer money for the going currency market rate.
If you already have several international employees or contractors, and are looking for a more affordable way to make mass payments abroad, XE offers services which can save your business time and money. You can make simultaneous payments to several overseas employees at once, either in the same country, or several. Since international money transfers are our core business, you may be surprised at how much easier and less costly international payments can be.
ShieldGeo, a company which specializes in international HR management services, offers these four scenarios for paying employees and contractors overseas.
Hire a foreign employee who works from home initially.
Send a tenured employee or executive for a short term assignment (as described above) to establish a foundation for the business abroad.
Build a team of contract business development representatives.
Outsource your payroll to a local contract Professional Employer Organization (PEO) company.
Does your business consult with companies that are expanding internationally? Our partner program is a lucrative way to expand your client services portfolio, while adding new, hassle-free revenue stream opportunity for your company.
Some channel-driven businesses have a local business partner put a skilled employee on their payroll, and reimburse them (including necessary taxes and benefit deductions) through a service like XE Money Transfer.
Is your business looking to expand overseas, and need a reliable, secure way to pay your overseas employees and contractors? Visit the XE Business Money Transfer page to explore our structured products and services for businesses of all sizes.