Meet Kaira, the brains behind an incredible health and wellness e-commerce hub in Singapore. She is all about making healthy living accessible, offering top-notch products like supplements and fitness gear. Kaira's not just a local hit – she's a key player in the thriving health scene. She sources the best products for her business from around the globe. But that’s not all! She also handles an international crew and uses a digital transfer system for salaries and all other transactions. It's not just about her business – Kaira is part of a global shift. Using a digital remittance platform, Kaira is cutting costs, smoothing international trade, and promoting inclusivity in her team.
So, let’s explore the world of remittance and understand how crucial it is in enhancing global expansion and facilitating seamless cross-border transactions for your business, just as it did for Kaira.
Remittance means the process of sending money from one party to another, especially when it comes to transferring funds overseas. For a business owner, remittance means transferring funds smoothly within your business network. Whether settling invoices with suppliers and vendors or managing international transactions, remittance is crucial in keeping your business financially operational. It involves making timely payments for goods and services and even handling payroll, especially if your employees are scattered across different locations. Whether you opt for traditional banking methods or embrace modern digital platforms, how you handle remittance payments can significantly impact the efficiency and cost-effectiveness of your financial transactions. Efficient remittance processes are essential for maintaining a steady cash flow and managing relationships with your business partners.
It's important to note that remittance isn't exclusive to businesses. It also encompasses individual money transfers between countries. The term refers to the process of individuals or family members sending money from one country to another, emphasising its broader application beyond business transactions.
Another very popular term associated with remittances is bank remittances. It basically means sending or receiving money internationally through banks. You use these financial institutions to securely transfer funds across borders, whether for personal reasons, business transactions, or investments. While opting for bank remittances, the intermediary bank ensures security and regulatory compliance, keep in mind that fees and processing times may vary. Global remittances involve a network of banks, currency exchanges, and regulations, all impacting the efficiency and cost of moving money across borders.
There are two main types based on who receives the funds.
Inward Remittance involves receiving money from a foreign location in your own country. This could be for various reasons like receiving your salary or payment for services your business has rendered. Essentially, it's the flow of funds into your country, contributing to your business finances, whether for operating expenses, investments, or other financial obligations.
On the flip side, sending money abroad from your home country to a person, company, or institution residing abroad is referred to as outward remittance. For example, if your company sends salaries to international employees, that's an outward remittance. Understanding these two types helps you manage and categorise the flow of funds in and out of your financial transactions.
Here's the lowdown on how your business can send or receive money:
Go for the classic move – direct money transfer. Shift funds from your business bank account straight to the other recipient's bank account. Do it online or hit up your bank's branch. However, it’s important to keep an eye on those fees, especially if you're swiping with a credit card.
Consider money orders if you're not in a rush and want to keep those transaction fees low. Deposit them at the bank, provide the recipient's details, and you're all set.
Taking it old school, you can move money with cheques. Just a heads up, though – it's a slow process with account verification and processing time.
And for a bit of electronic magic, try prepaid debit cards. Load them up, enter the beneficiary's details, and send that money over. However, some prepaid cards might hit you with hefty international transfer fees, and only some countries are on board with payments from these cards.
Singapore has a well-connected banking scene with branches all over. Use it to your advantage for remittances. If your usual bank is playing hide-and-seek, try cosying up to a new one. Also, credit unions and payment services institutions may do transfers at a lower cost. For instance, Aspire’s business account can be a viable alternative for efficient and affordable business transactions.
In the remittance process, as a business owner, you'll encounter four key parties:
Remittance fees are contingent upon the service provider, and the specific service utilised for sending money internationally. The costs associated with transferring funds across borders can differ significantly depending on factors such as the financial institution or remittance service chosen. Providers may implement diverse fee structures, encompassing handling charges, currency conversion fees, and other associated costs.
When you send money overseas from your SGD account to your vendor overseas, it's essential to be aware of the various fees associated with the transaction. Here's a breakdown of the different types of fees:
Now that you know what is remittance and how remittance transfer fees work, let’s look at their benefits.
You'll find several benefits that play a crucial role in economic well-being:
The Monetary Authority of Singapore (MAS) and individual financial institutions play a role in establishing and enforcing these limits. Remittance limits include
According to a recent report by Allied Market Research, the Singapore Remittance Market, valued at $8.05 billion in 2022, is projected to reach $13.34 billion by 2032, with an anticipated Compound Annual Growth Rate (CAGR) of 5.2% from 2023 to 2032. The growth is attributed to Singapore's sizable foreign population, its role as a global financial hub, and advancements in digital banking and fintech services, which have facilitated more accessible and efficient remittance options. This positive outlook underscores the dynamic financial landscape shaped by Singapore's economic strength and its evolving position in the global financial ecosystem.
The impact of fintech on remittance fees in Singapore is quite significant for businesses. Fintech companies bring innovation to the table, often offering more competitive pricing by cutting overhead costs through efficient use of technology.
Fintech platforms are known for transparent fee structures, making understanding the costs associated with your remittance transactions easier. Beyond cost, fintech enhances efficiency and speed, providing faster and more streamlined remittance services. Some platforms even facilitate remittances through digital wallets, offering businesses a seamless and cost-effective alternative to traditional banking channels.
Understanding the difference between remittance and payment is crucial for a business. Remittance typically involves sending money across borders using various methods like traditional banks or digital platforms. Therefore, remittance is not limited to just “digital transfers” between countries. However, in nowadays, it is commonly associated with international money transfers through digital channels.
But is it just like transferring money from one account to another? Let's find out.
Let’s consider the scenario wherein your tech company in Singapore regularly procures components from a vendor based in Australia. When you initiate a transaction to send funds to settle the payment for these components, it's not just any payment; it's a business-to-business foreign remittance. This goes beyond a domestic payment for goods and introduces an international dimension, highlighting the crucial difference between a standard payment and a cross-border remittance in the business world.
Look no further than Aspire. Our multi-currency business account offers businesses market-leading FX rates, up to 3 times more cost-effective than traditional banks. Send and receive international payments in 30+ currencies across 130+ countries on the go.
Aspire provides a streamlined solution, allowing you to issue unlimited virtual cards instantly to your team. Each employee can have their own virtual card, enhancing both the efficiency and security of your purchasing process. Moreover, our corporate cards offer a 1% cashback on digital marketing and SaaS spending with leading names in the business tech industry.
But that's not all. With Aspire, you gain real-time control and visibility over your card spending. Monitor expenses, set spending limits, and establish approval policies—all at your fingertips. Our product seamlessly integrates with your accounting software, ensuring automatic synchronisation of transactions for efficient bookkeeping.
So, why wait? Open a business account with Aspire right away!