Accounts with Banks and Payment Systems: What Does Business Prefer?

In the current circumstances, the survival strategy for most medium-sized and large businesses is to prioritize their cash flow management and develop a cost-reduction plan. Therefore, many businesses are considering opening accounts with offshore banks and payment systems at the same time. This article discusses the benefits of pre-approval service and shows the best way to pick the right foreign bank account for your business.

Accounts and banks in payment systems picture

How Do Business Accounts Abroad Facilitate B2B Payments?

With the onset of the Covid-19 crisis, business payments have changed fundamentally. This was facilitated by the growth of payment systems and digital banks, which made the money transfers to partners, counterparties and suppliers much easier.

Approximately 67 percent of companies make their payments using electronic services and conventional bank accounts, while 33 percent use bank current accounts only.

Today, business owners have to look for secure options to simplify their B2B payments and reduce their costs. To improve their financial flows, businesses use corporate bank accounts and EMI payment systems side by side.

This strategy allows hi-tech companies to make payments for servers, logistics companies are able to engage a team of consultants to identify the ways of enhancing efficiency of their services thanks to it, and manufacturing plant owners make payments to their suppliers for the raw materials received.

In a nutshell, every time one company bills another, it creates an online B2B payment. And that’s fine if both companies are located in the same country. But what if key partners are scattered around the world, for example in such countries as China, the United Kingdom, Poland or Italy? What if a business needs SEPA and SWIFT at the same time?

How can one reduce the commission burden on the company’s budget and speed up the processing of foreign currency transactions in such a situation? Having two, three or in certain situations even four corporate bank accounts becomes a must. Yet this can be avoided if you open accounts with a bank and a payment system at the same time.

Why Do Businesses Find Offshore Payment System Accounts So Attractive?

The growth of the B2B payment ecosystem has been driven by digital innovation in the industry with growing market demand and changing market infrastructure. Therefore, digitized marketplaces have proven to be very attractive to various manufacturers in different industries, wholesalers and even distributors.

Over the past few years, the number of payment systems and neobanks has increased significantly. Their main goal is to streamline online payment processes for businesses of all sizes. Such platforms offer many advantages. They are convenient, fast and cost-effective. In addition, their instruments are easily integrated with popular accounting programs. 

The services of payment systems are diverse. Here are just certain examples of what businesses can benefit from:

  • Open merchant processing accounts;
  • Use accounts with personal IBAN;
  • Use services for crypto currency exchange;
  • Order payment cards;
  • Make Forex transactions;
  • Effect bulk payments for goods, services and products;
  • Use a quick currency conversion service.

Advantages of foreign payment system:

  • Minimum bureaucracy and favorable compliance procedures for foreign companies;
  • The possibility to work with high-risk companies;
  • Remote account opening with a payment system;
  • All operations are carried out online;
  • User-friendly interface and personal online account;
  • High level of personal data security.

Many payment systems provide their own foreign exchange for fiat and sometimes crypto currencies within the system. 

However, one should keep in mind that payment systems are not designed for storing or investing money – so they will not be able to replace the classic offshore bank account 100 percent.

How Do I Choose an Offshore Bank and a Jurisdiction with the Pre-Approval Procedure?

Stricter requirements to combat money laundering and terrorist financing, and the introduction of automatic exchange of tax information, has led to the fact that foreign banks have been forced to step up their compliance procedures. Today, refusals to open business accounts are almost the norm.

For example, IT-companies developing and implementing a product that cannot be touched or counted have certain difficulties in opening an account with a foreign bank. Difficulties also arise for companies providing online advice and engaged in high-risk businesses such as pharmaceuticals, gambling, dating, etc.

The realities are such that it is impossible to guarantee the opening of a foreign account. But it is possible to increase your chances for a positive result of the application. In order to do this, the experts of Offshore Pro Group suggest you use the Bank Pre-Approval Service.

What is offshore bank account pre-approval and how does it work? 

Pre-approval is designed, as the name suggests, to get an approval in principle for bank account opening without having to send the entire file of required documents. 

The customer fills out a Pre-Approval Form that is similar to the standard bank questionnaire. It is important to carefully and extensively spell out the following:

  • Business structure. The existing or newly created company, holding company, other;
  • The jurisdiction where you actually conduct your business;
  • Details of all beneficial owners and directors;
  • The number of company’s employees;
  • The history of your business, for how many years the company has been in the market;
  • The main business activities of the company;
  • The estimated transactions, their volume, frequency, currencies, countries;
  • The list of incoming and outgoing payments;
  • Your company’s website address.

If the company’s business is clearly understandable, pre-approval can often even include a provisional account number allocated in the client’s name.

All this information is necessary to analyze the customer’s profile and to make the right selection of a corporate account that will allow unhindered conduct of international business.

Opening accounts with banks and payment systems together is the choice of far-sighted entrepreneurs. Using several business accounts at the same time, businesses may reduce the risk of sudden account blockage and stoppage of B2B payments. 

Want more information? Do not hesitate to schedule an individual consultation or contact us using the special box above. We guarantee a high level of your personal data security.

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