Doing business internationally is not an easy task. Speaking with experience, business transactions are one of the trickiest, yet crucial parts when done internationally. Since there are various changes in currencies, compliance, regulations, etc., it’s not as easy as paying someone domestically.
As you can see in the infographic below, merchandise exports from WTO members totaled $18 trillion in 2024 (ResearchGate). This massive number involves various parties and stakeholders that mastered the art of international business and smooth payments and made a fortune out of that.
So, to leverage the trend of globalization and keep your business up-to-date, read the blog till the end.
Understand Local Regulations
Each part of the world has its own set of rules and regulations. These regulations include compliance and guidelines to adhere to. The following are some details about them:
Tax Compliance
Each country follows a unique set of tax rules and regulations for different business aspects. The same is the case for international trade. Value Added Tax (VAT) and the Goods and Services Tax (GST) are some common types of taxes that are present everywhere. Hence, it is advised to go through these tax regulations during due diligence to avoid any kind of issue in the long term.
Import and Export Rules
There are all kinds of restrictions, tariffs, and duties involved with international transactions and some countries are stricter than others. Before making any business deals or sending off any goods, ensure that you have the necessary permits to do so.
Employment Laws
Having knowledge of local labor and employment laws is necessary in case you need to hire some workforce locally. Improper research may mistakenly hire workers in a way that does not comply with local employment laws, and this could damage the reputation of your business.
Choose the Right Payment Systems
Offering a variety of payment options brings convenience and ease to overall operations. For example, if you need to send money to Nigeria from Japan, using safe and secure payment channels is necessary.
Likewise, find a payment system that supports multiple currencies, provides secure processing, and aligns with local consumer habits. Also, the platform must be able to complete transactions globally, rather than offering services in limited locations.
Managing Currency Exchange
As you are working internationally, even a bit of currency change can bring a huge difference in your final amount. Hence, the following is how you can stay up-to-date with it:
Real-Time Conversions
Digital tools and solutions are the best way to find out in real-time rates since they are more convenient and accurate. Also, digital solutions are quicker than any other option.
Pricing in Local Currencies
Offering pricing in the local currency of your customers shows that your business cares about their confidence in you. This will immediately increase trust from the customers and lead to more deals in the future. This is also a sign to bring transparency in the dealings, ultimately, avoiding confusion on the customer’s end for exchange rates.
Drafting Clear Contracts
Contracts are an essential part of successful international business relationships because they create a clear understanding between all parties. Because international business dealings often involve language barriers and varying legal systems, it is important to create contracts that are easy to understand and include all necessary information.
Using Experienced Translators
Having a translator on your client’s side can be a huge green flag. Hiring an experienced translator is a great idea if you are working in a location where English or any international language is not prevalent. The translator must be capable of translating your contract correctly using the business vocabulary and accurate business language.
Terms and Conditions
Your contracts should clearly define payment terms, delivery timelines, and the responsibilities of each party. This will create an understanding between business partners from the get-go.
Dispute Resolution
Including a section that details how you and the other involved parties will resolve any disputes that may arise is necessary. You can allocate the responsibility to local courts or state that things will be resolved through arbitration.
Governing Laws
Which country’s laws will govern the contract between international business partners? This question needs to be answered in documents. Only one jurisdiction can be in charge of handling and upholding the agreements in the signed contract.
Bridging Cultural Differences
Getting into the culture of the business partners or the stakeholders you are dealing with can lead to a major success in the deal. It’s a sign of your involvement in the business relationship and that you want to make transactions as smooth as possible. Here are a few ways you can adapt to bridge the cultural gap.
Interesting Fact Despite different regions in the world, digital wallets are the most used payment methods when it comes to online payments.
Some cultures prefer direct communication, whereas others have a more relaxed view of business negotiations. When you enter into any business transaction with a team from a different country, it is necessary to research their communication style beforehand so you are not taken off guard.
Optimizing Logistics and Supply Chain Management
If your business transactions are not purely monetary, you also have to deal with the transaction of goods. The logistics of shipping and supply chain management are seamless and will help you have a better reputation with your international business partners.
The rewarding nature of working with other cultures in the business world makes it appealing to many businesses. Use this guide to start successfully handling global business transactions.
