Growing a global business has a lot of advantages, but it also has a lot of hurdles. It’s critical for sellers to have a partner who understands their needs, pain points, and business goals when it comes to sourcing new products, integrating into new marketplaces, and dealing with new taxation. Creating localized access for businesses all over the world is essential for better capital management and removing the additional costs and challenges that come with doing business internationally. We list out some of the opportunities and key elements for globalized success in this article.
Invoice payment terms vary around the world. In China, suppliers wait an average of 92 days or more for invoices to get paid compared to businesses in New Zealand, which wait an average of 43 days; South Africa, Denmark, and Austria also saw substantially shorter invoice payment times. As a seller this means you incur those costs from suppliers. As suppliers prepare for invoices to be paid 2-3 months from issuance, they have to account for the rising cost of inflation, fx fluctuations and higher transfer costs to their local currency.
Paying Suppliers
If you’re new to the Amazon selling space and you’re in search of useful knowledge that will help you cut to the chase when it comes to the other do’s and dont’s of paying your suppliers, you’re in the right place.
There are a few universal best practices to keep in mind when it comes to paying suppliers and safely receiving your goods.
Payment agreements
The most commonly accepted agreement we see when it comes to striking a deal with suppliers is a 30/70 contract.
You’ll pay 30% of your invoice upfront – to start production, and the remaining 70% later when production is complete.
Never send 100% payment up front
It’s in your best interest to proceed cautiously when making larger purchases. With a 30/70 contract, you’re more protected. If anything goes wrong for any reason, you’ll only be out 30% of your money instead of 100%.
Here’s a breakdown of how paying your Chinese suppliers works
Typically, most sellers will use Tier One banks like HSBC, CITI, WellsFargo, Fidelity and Chase to send wire payments to their suppliers. Some sellers will also use money-sharing apps, not fully understanding the risks.
Wire transfers are virtually untraceable. Once you’ve sent that money, it’s gone. And if you so much as spell a name incorrectly, get a number out of place, or accidentally send $10,000 instead of $1,000 – it could be 3 weeks (or more!) before you are able to recuperate your money.
Many money-sharing apps charge fees between 3-6% to send money. A supplier will likely want the buyer to pick up that cost.
If you’re in the United States or Europe but need to pay a supplier in a currency different from your domestic currency, guess what: more fees.
Why should I use a money transfer app or payment provider?
Paying suppliers should be as simple as moving money at the click of a button.When someone is using PingPong’s platform, they click a button to move money from A to B. There are a lot of things in the background that happen to make sure that the process is low-cost and without any issues or delays for your money to arrive to your desired recipient safely and on time.
The banking technology and infrastructure needed to make that happen is built into their platform. As a lending payment provider in FinTech, merchants aren’t the only users the company onboards to their platforms. Suppliers and recipients on the other end also go through a vetting process by local teams within that particular country where the supplier is located to eliminate time delays, fraud, scams and losses.
Benefits Chinese suppliers & customers receive from PingPong
- No cost for inbound transactions
- Real-time payments, 24/7
- Industry-leading rates
- Building better relationships to grow how they do business
- Suppliers can streamline the process for payers, avoiding reconciliation and lengthy transactional delays
- Avoid risks associated with currency fluctuations
Conclusion
These benefits are vital to success for any eCommerce and Amazon seller. Vetting suppliers (or having a payment provider that does that on your behalf), forming better relationships with those suppliers and being able to pay them at the click of the button is critical when it comes to prevailing over the already disrupted supply chain and inventory challenges the world is facing.
Having a supportive payments provider as a part of your operational framework in place is a crucial differentiator when distinguishing success on marketplaces like Amazon.com, Alibaba.com, and Etsy.com, among others. This strategy will bring massive savings, transparency, and flexibility to your inventory and supply chains for the forthcoming future and beyond.
Are you ready to get your free PingPong account and begin paying your suppliers and growing your business internationally? Click here to check out more info and to get a new sign-up offer!
