The CFO's guide to optimizing vendor payments across borders

Managing vendor payments across international borders presents unique challenges for today's CFOs. With international transfers expected to increase five percent per year until 2027 ¹, the complexity of cross-border payments continues to grow. Each of the 195 countries maintains their own payments systems, regulations, and levels of technological maturity ¹, creating a labyrinth of requirements that finance teams must navigate daily.

The stakes for getting international vendor payments right have never been higher. Many small businesses that trade internationally operate with profit margins in single digits ², making payment efficiency critical to profitability. For CFOs overseeing global operations, optimizing these payment processes isn't just about operational efficiency – it's about protecting the bottom line and maintaining competitive advantage in an increasingly connected world.

Understanding the current landscape of cross-border vendor payments

The global payments infrastructure has evolved significantly, yet challenges persist. Currently, 84 percent of payments are now either direct payments or they have one intermediary ¹, showing improvement in payment routing efficiency. However, this streamlining hasn't eliminated all friction points.

Speed and reliability improvements

Recent data reveals encouraging trends in payment processing times. Through the Swift network, 89 percent of payments arrive at the destination bank within an hour ¹. Even more impressive, half of these payments make it all the way to the beneficiary account in less than five minutes ¹. About 80 percent take six hours, with virtually all the rest coming within the 24-hour time frame ¹.

These improvements represent significant progress, yet they don't tell the complete story. According to data analytics company LexisNexis, up to 50 percent of payments that don't complete or are delayed are due to simple data entry problems ¹. These errors include incorrectly typing the bank name and address, or getting the account numbers, IBAN or Swift BIC codes wrong.

The hidden costs impacting your bottom line

For CFOs managing international vendor payments, understanding the true cost structure is essential. A typical 'standard' foreign exchange margin for a business account is over 2% even for amounts in excess of £50,000 with mainstream banks in the UK ². These costs quickly compound across multiple transactions.

Consider this: a transfer of a thousand US dollars could cost around £40 - over 4% of the amount ². For businesses processing hundreds or thousands of vendor payments monthly, these fees represent a significant drain on working capital.

The transparency challenge

Banks clearly disclose payment fees for international transfers, but foreign exchange conversion costs are less transparent and often more expensive for small businesses ². This lack of transparency makes it difficult for finance teams to accurately forecast and budget for international payment costs.

Most incumbent banks do not offer competitive exchange rates and payment fees for businesses until they reach a certain size ². This creates an uneven playing field where smaller and mid-sized companies pay disproportionately higher fees for the same services.

Technology transformation in vendor payment systems

The digital payment market is experiencing rapid growth, expected to grow at a CAGR of 15.62% during 2024-2032 ³. This expansion is driven by technological innovation that's reshaping how businesses handle vendor payments.

Emerging payment technologies

Real-time payments (RTP) systems are expected to generate $173 billion in additional economic output by 2026 ¹. These systems enable instant settlement and improved cash flow management for businesses of all sizes.

Major market players are leveraging technologies such as blockchain, artificial intelligence, machine learning, and the Internet of Things (IoT) for making transactions more convenient ³. These innovations are particularly relevant for vendor payment optimization, offering automated reconciliation, intelligent routing, and enhanced security features.

The role of automation in accounts payable

Modern accounts payable systems are transforming how businesses manage vendor payments. Understanding what accounts payable encompasses is crucial for optimization ⁴. These systems now integrate sophisticated automation capabilities that reduce manual processing and minimize errors.

Many businesses use AP automation, payment runs, and accounting system integrations for domestic payments but few solutions exist for SMEs for foreign invoices ². This gap in the market creates opportunities for businesses willing to adopt comprehensive international payment solutions.

Building a strategic approach to vendor payment optimization

Optimizing vendor payments requires a systematic approach that addresses both operational efficiency and cost management. Foreign payments often require more details and additional verification steps and are mainly done manually, leading to numerous mistakes ².

Establishing payment infrastructure

The foundation of efficient vendor payments starts with the right infrastructure. A business account designed for international operations provides essential capabilities ⁵. These accounts offer features specifically tailored for cross-border transactions, including multi-currency capabilities and integrated payment processing.

For businesses managing complex vendor relationships, implementing comprehensive spend management strategies becomes essential ⁶. This approach provides visibility into payment patterns and helps identify optimization opportunities.

Selecting the right payment provider

Choosing an appropriate payment provider is critical for optimization success. Your guide to choosing the right payment provider should consider multiple factors beyond just cost ⁷. Key considerations include:

• Global reach and currency coverage

• Integration capabilities with existing systems

• Transparency in pricing and fees

• Speed and reliability of payments

• Compliance and security features

• Customer support and service levels

Companies using specialist currency providers, fintechs, or neo banks can save up to 80% on foreign payments ². This dramatic cost reduction demonstrates the value of moving beyond traditional banking relationships for international payments.

Industry-specific considerations for vendor payments

E-commerce sector challenges

E-commerce businesses face unique challenges when navigating trade realities ⁸. These companies often work with suppliers across multiple countries, requiring sophisticated payment orchestration to manage different currencies, payment methods, and regulatory requirements.

The retail segment attained the leading share in 2019 and is anticipated to witness noteworthy growth over the forecast period ⁹. This growth drives demand for more sophisticated vendor payment solutions that can scale with business expansion.

Travel industry requirements

Travel companies have discovered significant opportunities to save on cross-border payments ¹⁰. The travel sector's global nature requires constant international transactions with hotels, airlines, and ground transportation providers across multiple jurisdictions.

A case study from Flightpath demonstrates how modern payment solutions transform operations ¹¹. By implementing integrated payment systems, travel companies can reduce transaction costs while improving payment speed and reliability.

Implementing expense management for vendor payments

Effective expense management software tools are essential for optimizing vendor payments ¹². These systems provide real-time visibility into payment flows and help identify cost-saving opportunities.

Key features for vendor payment optimization

Modern expense management platforms offer several critical capabilities:

• Automated invoice processing and approval workflows

• Real-time currency conversion tracking

• Vendor payment scheduling and batch processing

• Integration with accounting systems

• Comprehensive reporting and analytics

• Audit trails and compliance documentation

The future of cross-border vendor payments

Central bank digital currencies

The payment landscape is evolving rapidly with 90 percent of central banks globally currently working on developing a Central Bank Digital Currency ¹. These developments could fundamentally reshape international vendor payments by reducing intermediaries and settlement times.

Regional payment integration

Singapore has recently integrated its real-time PayNow network with faster payment networks in India, Thailand and Malaysia ¹. While currently limited to smaller payment amounts, these integrations represent the future of seamless cross-border transactions.

Managing accounts receivable alongside payables

While optimizing vendor payments, CFOs must also consider the broader cash flow picture. Understanding accounts receivable management helps balance payment timing ¹³. This holistic approach ensures optimal working capital management.

Saving several per cent on foreign turnover can have a dramatic effect on net profitability for SMEs ². By optimizing both sides of the payment equation, businesses can maximize their financial efficiency.

Introducing modern bill pay solutions

The evolution of bill pay technology offers new opportunities for vendor payment optimization ¹⁴. Modern solutions integrate directly with accounting systems, automate payment scheduling, and provide real-time tracking of payment status.

Benefits of integrated bill pay systems

Integrated bill pay platforms deliver several advantages:

• Reduced manual data entry and associated errors

• Automated payment scheduling based on terms

• Centralized vendor management

• Enhanced cash flow forecasting

• Improved vendor relationships through timely payments

• Comprehensive audit trails for compliance

Security considerations in vendor payments

Companies are prioritizing security and investing in robust security systems to protect sensitive consumer data and transactions due to the rise in cybercrime and financial fraud cases ³. This focus on security is particularly critical for vendor payments, which often involve large transaction values and sensitive financial information.

Implementing security best practices

Protecting vendor payment processes requires a multi-layered approach:

• Multi-factor authentication for payment approvals

• Encryption of payment data in transit and at rest

• Regular security audits and vulnerability assessments

• Vendor verification procedures

• Segregation of duties in payment processing

• Real-time fraud monitoring and alerts

Why Airwallex stands out for vendor payment optimization

After examining the landscape of cross-border vendor payments, Airwallex emerges as a comprehensive solution addressing the key challenges CFOs face. The platform was recognized as a finalist for the Best Business Payments System category in the 2025 PayTech Awards ¹⁵, validating its position as a leader in the space.

Comprehensive global infrastructure

Airwallex provides businesses with access to local payment networks across multiple countries, eliminating the need for multiple banking relationships. This infrastructure enables faster payments while reducing costs through competitive exchange rates and transparent pricing.

Integrated financial operations

The platform combines multiple financial services into a unified solution, from multi-currency accounts to automated bill pay capabilities. This integration streamlines operations and provides CFOs with complete visibility over their international payment flows.

Technology-driven efficiency

By leveraging advanced technology for payment routing and processing, Airwallex helps businesses avoid the common pitfalls of international payments. Automated validation reduces the data entry errors that delay up to half of international payments, while intelligent routing ensures optimal payment paths.

Scalable solutions for growth

Whether managing payments for a growing e-commerce business or coordinating complex supplier networks for a travel company, Airwallex scales with business needs. The platform's API-first approach enables seamless integration with existing financial systems, preserving investments in current infrastructure while adding new capabilities.

Taking action on vendor payment optimization

Optimizing cross-border vendor payments requires a strategic approach combining the right technology, processes, and partners. The potential savings are substantial – businesses can reduce international payment costs by up to 80% by moving beyond traditional banking solutions.

For CFOs ready to transform their vendor payment operations, the path forward involves:

1. Assessing current payment costs and inefficiencies

2. Evaluating modern payment platforms against specific business needs

3. Implementing integrated solutions that address both immediate pain points and future growth requirements

4. Continuously monitoring and optimizing payment processes

The complexity of international vendor payments will only increase as businesses expand globally. By adopting comprehensive solutions like Airwallex, CFOs can turn this complexity into competitive advantage, reducing costs while improving operational efficiency and vendor relationships.

The evidence is clear: traditional approaches to cross-border vendor payments no longer serve modern business needs. With the right platform and strategy, CFOs can optimize their vendor payment processes, protect profit margins, and position their organizations for sustainable global growth.

FAQ

How much can CFOs save on international vendor payments with modern payment platforms?

Modern payment platforms like Airwallex can reduce international payment costs by up to 80% compared to traditional banking methods. This significant cost reduction comes from lower foreign exchange margins, reduced intermediary fees, and more efficient payment routing across the 195 different payment systems worldwide.

What are the main challenges CFOs face with cross-border vendor payments?

CFOs face multiple challenges including navigating 195 different payment systems across countries, each with unique regulations and technological maturity levels. Additional challenges include high transaction costs, lengthy settlement times, currency exchange risks, and compliance requirements that vary by jurisdiction.

How is the cross-border payments market expected to grow?

According to J.P. Morgan research, international transfers are expected to increase five percent per year until 2027. This growth is driven by increasing global trade, digital transformation, and the need for more efficient payment solutions as businesses expand internationally.

What role does accounts payable optimization play in cross-border vendor payments?

Optimizing accounts payable processes is crucial for cross-border payments as it helps CFOs streamline vendor payment workflows, reduce processing times, and improve cash flow management. Modern accounts payable systems can automate payment scheduling, currency conversions, and compliance checks across multiple jurisdictions.

How can technology solutions improve cross-border payment efficiency?

Technology solutions improve efficiency by providing centralized payment hubs that can process payments across multiple countries and entities. For example, Emirates NBD successfully deployed TCS BaNCS for international payments across six countries, enabling streamlined processing in Singapore, India, UAE, and the UK.

What percentage of global payments now use direct or single-intermediary routes?

According to recent data, 84 percent of payments globally are now either direct payments or use only one intermediary. This trend toward simplified payment routing reduces costs, improves transparency, and decreases settlement times for cross-border vendor payments.

Citations

1. https://www.jpmorgan.com/payments/payments-unbound/volume-3/cross-border-payment-modernization

2. https://smexpo.co.uk/news/why-are-international-payments-still-broken-for-smes

3. https://www.imarcgroup.com/top-digital-payment-companies

4. https://www.airwallex.com/ca/blog/what-are-accounts-payable

5. https://www.airwallex.com/ca/blog/what-is-a-business-account

6. https://www.airwallex.com/ca/blog/spend-management-what-is-it

7. https://www.airwallex.com/ca/blog/your-guide-to-choosing-the-right-payment-provider

8. https://www.airwallex.com/ca/blog/ecommerce-businesses-navigate-trade-realities

9. https://www.datalibraryresearch.com/reports/online-payment-gateway-market-1940

10. https://www.airwallex.com/ca/blog/travel-companies-save-on-cross-border-payments

11. https://www.airwallex.com/ca/case-studies/flightpath

12. https://www.airwallex.com/ca/blog/expense-management-software-tools

13. https://www.airwallex.com/ca/blog/what-is-accounts-receivable

14. https://www.airwallex.com/ca/blog/introducing-bill-pay

15. https://informaconnect.com/paytech-awards/the-shortlist/