UK finance directors reveal barriers to trading overseas

Fifty-two per cent of UK businesses have encountered problems with foreign payments in the last year, according to Travelex Global Business Payments (GBP).

The study discovered that the effect was that as much as a month a year was then needed to manage and reconcile the funds. Carried out amongst finance directors of UK businesses that trade internationally, the study found that the biggest barrier to international trade is the time payments take to clear, with nearly half of businesses (44%) citing this as a priority problem. Its impact was on cash flow which is one of the top business imperatives for over a third (37%) of companies.

The lack of clarity over the true cost of international transactions was also highlighted as a key aggravation. Over one in three cited hidden fees as a frustration and more than fifth of those questioned (21%) expressed irritation that every intermediary bank involved in a payment using the SWIFT network takes a cut to process the payment so that the amount sent isn’t the amount received. This practice, known as ’beneficiary deduction’, makes reconciling payments hugely time consuming.

Other top payments gripes include:

having to physically call their bank to track overseas payments (24%)

being left to negotiate a resolution by contacting their bank when a payment goes missing (51%)

time required to investigate missing payments (24%)

uncertainty over how long payments should take to be handled – nearly one in ten finance directors claimed to have no idea how long an international payment takes.

The study was commissioned to enhance a new online payments system just launched by Travelex called GlobalPay. The company says the system can be used by businesses of any size and is suitable for all types of payments - domestic and cross border, urgent and non-urgent. It can be integrated into most front end accounting or ERP systems and hence eliminates the need for re-keying payments into multiple systems, and the need to hold multiple foreign bank accounts. It claims it can deliver payments faster and could reduce the cost of international payments by up to 60% by avoiding the fees associated with routing payments through multiple intermediary banks to reach the end beneficiary.

Notes
The research: 201 interviews were conducted with finance directors from UK businesses who undertake international trade. Interviewing took place between 9th and 14th April 2008. The research was conducted by Harris Interactive.