The global food supply chain faces unique challenges in executing trade deals. turbulent tariff environments have led US importers to halt new product orders, especially for low-margin items. On the other hand, the new post Brexit checks (2024) have ramped up import fees by up to 60% per shipment, adding £330M annually to the UK food supply chain.
Furthermore, importers in the US and UK face challenges with cross-border payments, hidden transaction costs, delays, and currency fluctuations and these issues erode margins and disrupt operations. Food importers need to adopt effective strategies to maximize profits and ensure smooth payment processing across borders. By understanding where money leaks out of the process and adopting the right payment solutions, they can plug those leaks and create more efficient, revenue maximising import operations. Let’s look into the hidden costs in cross-border operations, why fast and transparent transactions are critical and how UK/US importers can manage exchange rate risks effectively.
Hidden costs in cross-border payments
When sending money internationally, many food importers underestimate the number of small charges that accumulate along the way. These costs are often buried in fine print or hidden in the exchange rate offered. Here are a few common costs you can avoid:
High foreign exchange margins
Transfer and intermediary bank fees
Delay penalties and lost opportunities
How to avoid them?
Use a specialist cross-border payments platform that offers transparent, upfront pricing with no hidden margins on FX rates.
Consolidate smaller payments into fewer, larger transactions to cut down on repeat fees
Negotiate with suppliers to confirm who will bear any receiving bank costs.
Track payments in real time so you can spot and resolve issues before they cause delays or extra charges.
Once you have identified the hidden costs and ways to avoid it, it’s important to focus on strategies to maximise the importer revenue and minimise the risk.
Maximising revenue and minimising risk
Food importers in the US and UK face numerous challenges when sourcing from African and Asian exporters, including logistical hurdles and regulatory compliance. A significant issue is the depreciation of the exporter's home currency, which, while boosting exporter competitiveness, simultaneously drives up food import prices. To mitigate these complex risks, importers require payment partners who comprehend their specific challenges. Here’s how specialised payment platforms reduce a part of financial burden on food importers:
Transparent pricing
Transparency in pricing is the biggest ask by importers across the markets. As 60% of merchants of Merchant Risk Council members saw an increase in first party fraud according to the UK state of Commerce Report, businesses are rightly demanding transparency in import and export prices.
Pay in supplier currency when advantageous
Sometimes, negotiating to pay in supplier’s home currency can help secure a better deal, especially if your payment platform gives you competitive FX rates.
Leverage multi-currency accounts
Holding balances in multiple currencies means you can choose when to convert funds, taking advantage of favourable exchange rates rather than being forced to convert on the day of payment. Multi-currency wallets are highly efficient in managing your transactions across borders.
Auto exchange rate, forward contracts, and hedging tools
Food importer companies with long term contracts and predictable order flow should opt for forward exchange rates that can help in managing longer term currency risk. Payment platforms can offer auto exchange rates and hedging tools where you can setup your preferred rate and exchange on your behalf in real-time.
Partner with platforms for speed and transparency
Understanding the full cost of an international transaction is complex yet critical. Currently, the trade deals and changing tariffs in the US play a huge role while planning and adjusting operational models. Amidst these changes across the world, relying on the grace of your bank may not be a minimal risk solution. Verto allows you to convert GBP/USD to local currency to pay suppliers directly using local payout rails. Moreover, it can efficiently manage your foreign exchange exposure and mitigate risks with our comprehensive FX management solutions.
As businesses need to reduce the financial hit of currency movements, now is an opportune moment to invest in platforms that offer speed and transparency.
Here's why:
Avoid supply chain disruption. In case of perishable goods, even a day’s delay can mean products spoil before reaching the customer.
Strengthen supplier relationships with consistent payment channels, leading to better terms, and preferential pricing during high demand seasons.
Have visibility of exactly when the cash flow will leave and arrive at supplier’s end allows more accurate planning of inventory and expenses.
When you choose payment platforms that quickly yet securely process your payments, you can secure stock faster than competitors and respond rapidly to market trends.
Cross-border frauds now cost over $11 billion annually. With the increasing security concerns across borders, a safe and reliable payment gateway is the need of the hour.
Turbulent times are forcing importers to shorten the timeframe for long term decisions of their imports. For import businesses, this means, partnering with a reliable, fast, payment solution provider is more than just a requirement. Verto can be the true partner in need for US and UK based importers!
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