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Offsetting International Payments May be Right for You

Not too long ago a colleague of mine told me that he had entered into a relationship with an overseas agent in which both of them were exchanging claims for collection in each other’s respective countries. Both were having a lot of collection success, but initially they were both somewhat challenged by the complexity of processing numerous foreign remittances.

Undoubtedly, the remittance of funds is one of the more challenging aspects of transborder collections. Between bank fees and wire transfer requirements, not to mention the fluctuation in exchange rates, it can be both tedious and expensive to move multiple remittances back and forth. In this particular instance, the parties found that it was much more efficient to form an agreement to offset payments received on each side rather than remitting numerous single transactions. They found that they were able to:
  • Minimize fees by reducing the total number of transactions
  • Use cheaper foreign remittance platforms other than their bank that offer more competitive fees
  • Reduce the chance for errors by minimizing multiple payment processes
  • Avoid sudden exchange rate fluctuations that may occur in between ongoing remittances
By preparing a careful offset reconciliation statement to which both sides agree, whereby only one side needs to send the final remittance, the cost-effectiveness and efficiency of this kind of arrangement can not be overstated.

Nancy Hamilton more


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