Paying overseas suppliers: a UK business guide

Why supplier payments are different from paying a UK invoice

Paying a UK supplier is largely a solved problem: sort code, account number, Faster Payments, done within minutes. Paying an overseas supplier introduces variables that do not exist domestically — which currency the payment should be made in, which network it will travel over, how long it will take to arrive, and what it will cost once bank margins and correspondent fees are accounted for. None of this is complicated once you understand the moving parts, but it does reward a bit of upfront structure.

Step one: agree the settlement currency with your supplier

The single biggest lever most UK businesses underuse is simply asking the supplier which currency they would prefer to be paid in. Many manufacturers and trading businesses quote in USD by habit, but are perfectly willing to receive their own local currency — and often prefer it, because it removes a conversion step (and a margin) on their side of the transaction. Paying in the supplier's local currency can also make your business easier to deal with when it comes to renegotiating terms, because the supplier is not carrying currency risk on top of commercial risk.

If you deal with suppliers in multiple countries, a multi-currency account lets you hold balances in the relevant currencies and pay out without converting back to GBP and out again for every invoice.

Step two: get the beneficiary details right, once

Payment failures and delays are disproportionately caused by incorrect or incomplete beneficiary details, not by the payment network itself. Before your first payment to a new supplier, capture:

• Full legal beneficiary name, exactly as it appears on their bank account
• IBAN (or local account number and routing/bank code where IBAN does not apply)
• SWIFT/BIC code for the receiving bank
• The bank's registered address

Store this once against the supplier record rather than re-keying it from an email signature every time an invoice is due — that habit is where transposition errors creep in.

Step three: understand what determines cost and speed

Three things drive the cost and speed of an international supplier payment: the currency pair, the payment rail used, and the FX margin applied to the conversion. Major currency pairs (GBP/EUR, GBP/USD) typically settle same-day or next-day over well-established rails. Less liquid currencies can take longer and may route through more correspondent banks, each of which can apply a deduction. Read our explainer on international payment fees for a full breakdown of where costs actually sit.

Step four: build a simple cut-off and reconciliation routine

Every currency has a value-date cut-off — the time by which a payment must be instructed to settle on a given day. A simple internal rule (for example, "EUR and USD payments must be approved by 14:00 UK time") removes the daily scramble of missed cut-offs and next-day delays. When reconciling, always match against the rate that was actually applied to your payment, not an indicative rate you saw earlier — see our guide on currency conversion explained for how rates are quoted and applied.

Step five: decide whether to hedge recurring payments

If you pay the same supplier a broadly similar amount on a recurring schedule, that is a textbook case for a forward contract: you can lock in a rate today for a payment due in 30, 60 or 90 days, which turns a variable cost into a fixed, budgeted one. This matters most for importers with tight margins — see our dedicated guide on FX risk for importers for how to think about exposure sizing.

Who this is for

This approach suits UK importers, wholesalers, manufacturers sourcing components abroad, and any business with a recurring book of overseas payables. It applies whether you are paying one supplier a month or running a payables desk with dozens of counterparties.

Where TimeFX helps

We provide UK businesses with the payment and FX infrastructure to manage this, and help you think through settlement currency, beneficiary onboarding and hedging in one conversation rather than three separate ones. Explore our international payments service or make an enquiry to talk through your current supplier book.