What is the best way to pay overseas suppliers
The right choice depends on a couple of questions. What is the payment amount? Which currency? And how often the payment recurs?
As a starting decision summary:
- Large, formal, one-off payments tend to suit a bank wire or an international payment platform, where documentation and traceability are more important than saving a couple of dollars
- Regular international payments to the same supplier tend to suit a multi-currency account or business financial platform, since fees and FX costs compound when paid repeatedly through a standard bank wire
- Smaller or occasional invoices can suit PayPal or a card, due to the easy setup and convenience
- Card-accepting suppliers, mostly software vendors and some service providers, suit a business or virtual card, particularly for recurring subscriptions
None of these is a universal winner. A business paying a single AUD $50,000 deposit to a German equipment manufacturer has a different optimal method than one paying USD $200 a month to a Singapore-based SaaS vendor.
What to check before paying an overseas supplier
This is worth doing before comparing payment methods, because it changes which method actually makes sense for a given payment. The best way to pay overseas suppliers depends on a lot of factors as mentioned below:
1. Invoice currency
There are 3 broad options: paying in AUD, paying in the supplier's local currency, or paying in a major settlement currency such as USD that neither party uses domestically. If you pay in AUD, your bank or platform converts the AUD to the supplier's currency, and you carry the FX cost and the exchange-rate risk.
If you pay in the supplier's local currency, the conversion has typically already happened on your side before the funds are sent, and you absorb the conversion cost directly. Here, the supplier doesn’t need to convert the amount on their end.
2. Total payment cost
A simple way to think about the real cost:
Total payment cost = transfer fee + FX cost + intermediary fees + recipient fees + supplier surcharges
Each of these is a separate deduction, and they don't all show up on your side of the transaction. The transfer fee and FX cost are usually visible upfront. Intermediary and recipient bank fees are frequently invisible until the supplier reports receiving less.
3. Supplier payment terms
How and when you pay often matters as much as the method itself. Common structures include a deposit paid upfront with the balance due before shipment, milestone payments tied to production stages, and payment in full before shipment. Some other payment terms could be payment after delivery, Net 30, Net 60, and, for higher-value transactions, letters of credit arranged through a bank.
4. Transfer speed
A bank confirming a payment was sent today does not mean the supplier has usable funds today. Several factors determine the real delivery time: the sending bank's daily cut-off time, weekends and public holidays in either country, compliance and sanctions screening, and the number of correspondent banks the payment passes through before reaching the recipient.
5. Payment traceability
Once a payment leaves your account, you need a way to track it and prove it was sent correctly. Transfer references, payment confirmations, SWIFT message references (such as the MT103 reference for a wire), and remittance advice sent to the supplier all serve this purpose.
Keeping these on file matters both for resolving disputes if a supplier claims non-payment and for your own reconciliation process.
Different ways to pay overseas suppliers for Australian founders
[Table:1]
Best methods to pay overseas suppliers compared by business scenario
Let’s take a couple of common scenarios where you need to send money to your international partners and see which payment method fits you the best.
1. Paying a Chinese manufacturer
Manufacturers commonly request a deposit, often 30%, by TT on order confirmation, with the balance due by TT before or upon shipment.
Many invoice in USD rather than CNY, since USD is the standard settlement currency across global manufacturing trade, though some will accept or prefer CNY, particularly for smaller domestic-facing suppliers.
2. Paying a US software supplier
US-based SaaS vendors typically bill recurring subscriptions in USD via card, and many support virtual cards specifically because they reduce the vendor's own fraud exposure on recurring billing.
Some providers also support direct ACH debits for US-domiciled customers, though this is less common for an Australian business paying a US vendor than it is for domestic US-to-US payments.
3. Paying an overseas contractor
Contractor payments often move through standard bank transfer, a local payment rail where supported, or PayPal, depending on the contractor's preference and the payment frequency.
Always include a clear invoice reference on the payment so the contractor can match it to the specific work performed, particularly if you're paying multiple contractors or multiple invoices in the same period.
For example, paying a Southeast Asian supplier monthly. This is where a multi-currency account or local payment rail may outperform repeated SWIFT transfers because fees and FX spreads compound over time.
What beneficiary details do you need?
[Table:2]
How much does it cost to pay an overseas supplier
[Table:3]
The pattern that holds regardless of exact figures: the bank wire's total cost is the hardest to predict in advance because of the embedded FX margin and the possibility of intermediary deductions;
Common mistakes when paying overseas suppliers
Paying an overseas supplier can fail even when the payment method itself is reliable. Most problems come from details around the transfer: the wrong currency, incomplete beneficiary information, unclear bank-charge instructions, or an unverified request to change payment details.
1. Comparing only the visible transfer fee
This misses the FX markup and any intermediary deductions, which are often larger than the fee itself. Calculate the full cost using the formula above before assuming one method is cheaper than another.
2. Sending in the wrong currency
Paying in AUD when the supplier expects USD, or vice versa, can trigger an unplanned conversion on either side and may not match the invoiced amount exactly. Confirm the invoice currency before initiating the payment.
3. Failing to agree who pays bank charges
Without an explicit OUR, SHA, or BEN instruction (where the bank supports the choice), the supplier may receive less than expected and assume you underpaid. Agree this upfront, ideally in the supplier contract.
4. Entering incorrect beneficiary details
A single wrong digit in an account number or a mismatched beneficiary name can delay the payment by days while it's queried or returned. Double-check every field before submitting, especially for first-time payments.
5. Accepting payment-detail changes without verification
This is the entry point for most supplier payment fraud. Verify any change through an independently confirmed contact method, not by replying to the email that requested the change.
For Australian businesses, supplier-payment fraud and business email compromise are major risks. Treat any bank-detail change as a high-risk event until verified independently.
6. Omitting the invoice reference
Without it, the supplier may struggle to match the payment to the correct invoice, especially if multiple invoices or partial payments are involved. Always include a clear reference.
Best practices for paying overseas suppliers
A reliable supplier-payment process starts before the invoice reaches your finance team. The strongest controls are built into the purchasing workflow: agreeing payment terms early, verifying supplier records, calculating the full cost, and separating approval from execution.
1. Agree the currency and payment method before ordering
Settling this at the contract or purchase-order stage, rather than at invoice time, avoids last-minute disagreements about who absorbs conversion costs or which method the supplier expects.
2. Calculate total cost before approving the invoice
Run the full cost formula, not just the transfer fee, before signing off on the payment method for any invoice above a threshold your business sets.
3. Maintain a verified supplier record
Keep a single, current record of each supplier's confirmed beneficiary details, preferred currency, and payment history, so each new payment can be checked against it rather than re-verified from scratch.
4. Separate invoice approval from payment release
Having different people approve the invoice and execute the payment reduces the risk of a single compromised step resulting in a fraudulent or duplicate payment.
5. Use dual approval for high-value payments
Set a threshold where one person approves the invoice and another releases the payment.
Keep payment evidence in one place
Save the invoice, approval, exchange rate, payment receipt, SWIFT reference or platform reference, and remittance advice.
How Aspire simplifies overseas supplier payments
For Australian founders looking to pay their suppliers and contractors, fintech solutions like Aspire’s business account is a great way to send and receive money in multiple currencies.
You get multi-currency accounts, with currency accounts available in AUD, USD, HKD, EUR, and GBP. You also get to send transfers to a recipient's local bank account, which is free for supported currencies and destinations.
Frequently asked questions
What is the best way to pay overseas suppliers?
It depends on the payment amount, currency, frequency, and how urgently funds need to arrive. Large, formal payments often suit a bank wire or payment platform; smaller or occasional invoices often suit PayPal or a card; and regular payments in the same currency are usually cheaper through a multi-currency account or international payment platform that avoids repeated conversion costs.
Is a telegraphic transfer the same as a wire transfer?
Functionally, yes, in almost all practical contexts. Both terms describe an electronic, bank-to-bank transfer typically routed through the SWIFT network. "Telegraphic transfer" is more commonly used across Asia-Pacific, while "wire transfer" is more common in the US and parts of Europe.
What beneficiary details do I need for an international payment?
At minimum, the beneficiary's legal name, their bank's name, and their account number or IBAN. Depending on the destination, you may also need a SWIFT or BIC code, a routing number or sort code, the bank's address, and sometimes a purpose-of-payment code. Required details vary by country and currency, so confirm with your bank or platform before sending.
How long does an international supplier payment take?
It varies by method, destination, and currency, ranging from near-instant for card or PayPal payments to several business days for a SWIFT bank wire, depending on correspondent banks and compliance checks involved. The most reliable way to know is to confirm with the supplier when they actually receive cleared, usable funds, rather than relying solely on your own bank's tracking.
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