Despite these banking errors, 17 per cent of companies have been charged additional fees to rectify the problem. The subsequent costs and charges associated with investigation and recovery of these missing or delayed payments costs almost £100,000,000 per year – or £400 per company, per problem.
Travelex has identified the most common, cost-incurring problems faced by UK businesses when making international payments. The top five pain points are:
- Banks taking deductions or fees without the clients’ knowledge
- Incorrect account names (i.e. the account name does not match with the account number, as held by the receiving bank)
- Human error, either by a correspondent bank or the receiving bank, or the customer
- Bank delays – slow transfer of funds through the bank system
- Unsophisticated local banking networks in certain countries
In addition, despite being responsible for processing the transfer of funds, the research also shows that almost two thirds of problem payments will be first noticed by the customer – not the bank providing the transfer – further increasing the delay and subsequent cost associated with recovery of funds.
Tony Wilson, Director of Travelex’s Global Business Payments division, commented: “The demand for international business payment services is growing by 8 per cent year on year. With an increasing number of the UK’s small to medium sized businesses engaging in trade with their foreign counterparts, these figures illustrate just how often payments go astray, and the subsequent cost of putting things right.
“We would urge any business involved with international transactions to think carefully about how they go about sending money abroad and, importantly, who they use to facilitate the payments. The knock-on effects of things going wrong can be crippling for a small business and go beyond a financial impact, reputations and business relationships can also suffer.”