How escrow payment systems protect SMBs in the global marketplace

Scott Reynolds
Scott Reynolds
October 20, 2017

When small- or medium-sized (SMB) business owners contemplate entering foreign markets or sourcing goods and services from overseas, many concerns can get in the way of the romance they are hoping to establish with their new partners. SMBs may be more adaptable than large businesses, which makes them good candidates for expansion. But they may not enjoy the power and stability of larger businesses or be able to withstand similar financial hits. For a small business, even one delayed payment can slow down production. For a medium-sized business receiving services, parts or products that are subpar can result in a time-consuming and costly dispute. Situations like these can leave SMB owners feeling vulnerable and reluctant to scale internationally.

The mistrust barrier

 As an SMB owner looking to expand, you should not be bogged down by mistrust when you obtain clients, employ freelancers, find the perfect item for your shop, or part for your product, from anywhere across the globe. So what can you do if you have never met a client? Or do not have enough information to verify another business’s ability to pay? What if you find the perfect item online, but won’t know for sure until the item arrives? What if you receive your largest order to date and its’ production requires outlaying an uncomfortable amount of cash? What if a vendor operates in a country where the political and economic climate is unstable? And what if other businesses are asking similar questions about you?

Keeping up with expansion

Even the smallest software companies can find themselves in the position of needing more talent to keep up with growth. But the ideal developers for a given job may not be easy to find locally. Since there are talented developers in every corner of the globe, it makes sense for software companies to hire freelancers from wherever they may be, in the geographies where they need the talent. Having international freelancers also makes sense if your goal is to have international products. Finding talent can also be facilitated through service providers. But the payment options available to you at the outset may prevent your partnership from moving forward smoothly. For instance, the country in which your perfect-for-the-job freelancer lives may have a difficult banking system with unique regulations.

Remove the rub

Economic growth potential can be significantly inhibited if people engage in B2B transactions with the perception that the transactions are at risk until they are complete. Any expert will tell you that figuring out ways to make sure you will be paid is on the “getting started” short list for businesses seeking to scale internationally. But when that list also includes familiarizing yourself with another culture, wouldn’t it be beneficial if you could spend more time on the culture and less time on the finances? How can SMBs establish financial trust so that they may concentrate on the romance?

One of the best ways to establish trust during initial B2B transactions is through escrow. For some new partnerships, escrow can be used for the first several transactions, then the partners can move to payment terms as a longstanding business relationship develops. For others, especially in the international arena, staying with escrow can be the best option for keeping up with expansion and ensuring secure, problem-free transactions. Escrows provide better conversion and exchange rates. And escrows reduce the risks of lost time and money due to audits, by providing you with inexpensive real-time access to your transaction data, which is permanently recorded in order, without duplication.

Payoneer Escrow is the answer

For SMBs, scaling internationally can be like starting a new romance. It’s not for the fainthearted. Getting to know the people, language, and customs of a culture may be rewarding. But getting to know the financial regulatory system? Not so much. That’s where Payoneer comes in. We provide you with a licensed and secure online escrow payment service that reduces the risk of conducting global B2B transactions. Through Payoneer Escrow, you’re able to establish and ensure full trust with your new customers in new international markets as you expand globally. Also, because Payoneer Escrow manages all of your interactions with local legal and financial entities, you’re able to ensure compliance with local laws and regulations while saving you significant time and money. This extends the value of your business and supports the flow of production and expansion globally.

Learn more about how Payoneer Escrow can help your protect your business

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