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Ensure your supplier receives correct amount

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Published: 8th January 2019

Have you ever paid an invoice for an overseas supplier and had your supplier receive the wrong amount? It can be frustrating to fix but even worse it can delay production and waste your businesses precious time.

Here’s your comprehensive guide on the causes and how to ensure invoices paid in a foreign currency will result in the correct amount being deposited into your recipient’s bank account.

To demonstrate why your recipient is receiving the wrong amount, let assume you have an Australian bank with AUD and you need to pay your supplier $10,000 USD into their United States bank account.

For this to payment to take place, two main things must take happen; in no particular order:

  • The AUD must be converted to USD
  • The money must be moved from your bank to their bank



Henry Newton

Business Analyst

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Cause 1 – SWIFT Payment Charges

It is unlikely that your bank and their bank will be directly connected, so they will most likely need a third party to facilitate the payments (see the diagram below). For international payments, the third party that makes the transfer possible will be SWIFT and for their services, they will charge a fee.

swift international money transfer model

When your bank sends a payment through SWIFT they will have three options:

  1. Pay all fees associated with the transfer
  2. Pay some of the fees and let the recipient’s banks pay some
  3. Let the recipient's bank pay all the fees.

Option number 1 is most likely to ensure your recipient receives the correct amount since all the payment fees have been paid by your bank. There is, however, the possibility that your bank pays the fees out of the amount you are sending (causing it to fall short) but this would be highly unusual.

Option 2 and 3 will almost definitely cause your recipient to receive less than intended. The recipient's bank will most likely pass on any SWIFT fees to your recipient which is why it is always best to have your bank cover all SWIFT charges.

Side note: SWIFT payments fees are usually the bulk of the flat fee your bank charges when making international payments, the reason they waive these fees on larger transactions is that they make enough money on the exchange rate to cover the SWIFT charges (and still make a profit).

Unfortunately, it is often next to impossible to find out which option your bank has selected. Whereas, at Instant Global Payments, we will always select to cover all the fees involved and will transparently disclose the charge so you can be sure you are sending the correct amount.

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Cause 2 – Administration fees

There is always the possibility that your bank, a bank in the middle (an intermediary bank) or your recipient's bank will charge an extra fee for the time taken to process the payment.

These admin fees are fairly unusual; however, they still tend to occur. They are most common if your recipient is receiving a ‘non-native’ currency i.e. the currency they are receiving is not traditionally used in their country.

For the most part, these fees are impossible to detect in advance. However, at Instant Global Payments we will not charge hidden fees and we will let you know if in the past we have experienced the recipient's bank charging admin fees so you can plan in advance.

Cause 3 – Relying on the recipient bank to convert AUD to USD

At some point, the AUD you have will need to be converted into USD. If you were to send AUD to your suppliers United States bank account, the AUD will be converted to USD by your supplier’s bank.

The problem with this is that it’s at the discretion of their bank to decide what exchange rate to offer you.

Put simply, banks buy currency in bulk so they get the live market rate (the one you see on google) but when they convert small amounts for everyday people they will add a ‘mark-up’ (so the rate you get may be up to 5% worse than the current market rate).

So when you rely on the recipient's bank to convert the funds, you are also relying on the bank to offer you a good exchange rate (which is extremely unlikely given you aren’t even one of their customers). That’s why it’s always best to control the conversion from AUD to USD.

If you are looking to get the best possible exchange rate and have control, you should go with a third-party provider. Here at Instant Global Payment, we pride ourselves on offering clients superior exchange rates, clients that switch from their bank have saved up to 5% (don’t take our word for it, see for yourself)!

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Cause 4 – Exchange rate fluctuations

The exchange rates constantly fluctuate; some financial institutions will quote you are certain exchange rate but then give you another if it changes in the meantime. This will almost always cause your recipient to receive the wrong amount.

The only way to stop this is to find a financial institution that will lock in your exchange rate. Before you ask, yes, here at Instant Global Payments once you submit a payment we will lock-in your exchange rate, so the rate you see is the rate you get.


Basically, there is a lot of reasons that the person you are sending money to gets the wrong amount. Unfortunately, most of the reasons are beyond your control but the one thing you can control is which financial institution you use to send the money (and they can almost always ensure your recipient receives the correct amount). By sending your money through Instant Global Payments you can rest assured that everything possible will be done to ensure your recipient receives the correct amount.

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