The business transaction between two companies to exchange goods or services is referred to as B2B payments. As businesses grow across borders, they serve international customers and pay the invoices after receiving the service. The payment process gets complicated to send B2B payments from one country to another because of currency differences, payment regulations, and tax structures. To overcome these challenges, this article focuses on ways to send B2B payments from USA to the Canada and highlights the best fit for B2B cross-border payments.
Common Challenges with Cross-border B2B Payments
For businesses with international customers, B2B payments can be a real headache for the finance departments. This increases frustration for the AR team and slows down the business cash flow.
1. Payment Delays
Cross-border payments take time to receive, leaving the revenue of the business captive. Even if you use ACH to accept payments in the US, you can get frictionless payments experience at a lower cost but it may take up to five days. On the other hand, banks also take up to five days to process payments for various reasons. First, time zone differences limit the processing to the office timing. Currency conversion is another significant reason a customer from one country transfers funds to another country in its regional currency. Regulations and taxes are also crucial factors that drag B2B payment transactions.
2. Extra costs
Foreign exchange rates and regulatory costs add up as a transaction fee for an international payment. This also includes foreign exchange margins that often vary across banks, and where the customer and merchant are located. Things further get complicated due to a lack of transparency in international B2B payments. A business sending payment to a merchant cannot see the hidden charges and fees associated with the transaction, leaving them in the dark. Such unpleasant surprises affect the business budget.
3. Visibility
Businesses operating across borders often frustrate in tracking their international transactions because of low visibility. When sending payment through a traditional bank, you cannot track the progress or time when the seller will exactly receive it. This leaves you without any clue about the payment, making it challenging to determine its success. Reaching out to a receiver or the bank about the payment status is the only option, translating lack of payment visibility.
4. Lack of Transparency
International transactions are also prone to a lack of transparency, particularly when choosing banking as an option for transfer. It is due to the fees associated with the transaction, including exchange rates, transaction fees, and any other charges. Banks are often unclear about the rates they charge, and the final transaction fee surprises the sender.
5. Security
Regarding international transactions, security is another concern that businesses have to face. Forged checks, system hacks, and risks of other types of payment fraud are common with B2B international payments. You don’t know who the sneaky fraudster is after your next transaction because you lack control over traditional payment methods. Due to higher vulnerabilities of international payments, the chances are higher for fraudsters to exploit gaps.
Overcoming Obstacles to Send B2B Payments from USA to the Canada
Break free from cross-border payment challenges and consider the following methods to transfer payments from USA to Canada.
1. Choose Payment Method
To send payment to the seller from USA, an online money transfer service is the best option to choose. If you are concerned about security, you can use debit or credit card payment. You can accept ACH payments in the US and direct debit in Canada to ensure frictionless payments for your business in the B2B landscape. However, this payment method will take longer to transfer funds, so choose this option if you don’t need funds immediately.
2. Gather the Necessary Information
Once you have chosen the payment method, you will need some information to proceed with the transaction. This information includes the banking details of the merchant’s bank and their contact information. You must consider the taxes and transaction fees in mind before sending payment.
3. Initiate the Transfer
After putting all the information and selecting the transfer method, initiate the transfer and wait for its completion. If you have chosen the money transfer option for payment, it may take up to 24 hours for an international transfer from USA to the Canada. Credit or debit card payments takes up to one week for the transaction to complete.
4. Track Your Transfer
Once you have made the transfer, now is the time to track your transfer. To follow the progress, you need to check for the status of the transfer completion in your email or mobile message. If you think it is taking longer, you can also track it by calling the banking service you have chosen to send funds.
Ways to Send Money from US to the Canada
ACH Transfer
Also referred to as Automated Clearing House, ACH handles many transactions electronically. The B2B businesses in the US can seamlessly accept ACH payments from Canadian businesses without costing higher fees. Another advantage of the ACH method is that the transactions are encrypted and secure and payment reversals are possible for merchants. Considering the security and large amount of funds transfer, global ACH is a reliable option for B2B payments, but not if you have to send payments immediately. On the other hand, Canadian businesses can accept payments from US customers through direct deposit or electronic funds transfer (EFT).
Wire Transfers
This is the simplest payment method where the transaction is made between two banks directly, without any middleman. Wire transfer is also the fastest method to transfer funds, and the transaction is completed within two business days. Many businesses use wire transfer for B2B payments because it is reliable, fast, and secure. However, the transaction fee is higher for both the sender and the receiver. Lack of visibility is another disadvantage of this type of payment method. It is the best option for small amounts of payments and immediate transactions.
Prepaid Debit Card
The transactions made through a debit card use the network of the service providing the debit card. When you make a transaction, the funds are drawn from the payer’s account. This transaction is processed electronically and the funds are deposited to the payee’s account in a short span of time. It is also suitable for B2B payments to countries lacking banking infrastructure. The drawbacks include annual or monthly fees for the debit card regardless of its usage. In case of a wrong transaction, reversing the transaction is nearly impossible.
Verdict – Best Option to Send B2B Payments from US to the Canada
Businesses who want immediate payments of funds to their seller must choose global wire transfer or other third-party payment gateways for B2B payments. For safer and large amounts of payment, you can use debit card payments to transfer funds from USA to Canada. Companies with cross-border customers must embrace AR automation solutions to handle mass payments and ensure frictionless transaction journeys for customers. Automation helps streamline entire accounts payable and accounts receivable workflows, increases the visibility of payments, and helps mitigate the obstacles with cross-border payments.
