Safely Pay Your Suppliers In China. Save More of Your Hard Earned Money. Get Your Money Abroad Faster: PingPong’s Supplier Pay Makes it Happen Effortlessly.
This content is for eCommerce merchants and sellers, who are looking to pay their mainland China suppliers quickly and cost-effectively. When it comes to paying suppliers in China, there are a lot of hurdles one could face. Expensive inbound transaction fees, subject of higher costs of inflation, slow payments processing, and account maintenance fees are just a few of the obstacles you could face. Getting products from China is expensive and time-consuming. PingPong sees an opportunity to help you keep more of your revenue, streamline your supplier payments process, and increase your relationship with your suppliers across the board.
Read on to learn how, as both a seller and a supplier, you can save more time and money when it comes to sending and receiving funds, gain more security and take care of business, all in a single platform.
Wanna guess the average number of days it takes a company to pay a supplier (Days Sales Outstanding - DSO)?
According to global data, the answer is about an average of 66 days. Experts in this field project that the average DSO is likely to further increase in 2022, as well.
Look into this:
In China, suppliers wait an average of 92 days or more for invoices to get paid compared to businesses in New Zealand, which wait an average of 43 days; South Africa, Denmark, and Austria also saw substantially shorter invoice payment times. As a seller this means you incur those costs from suppliers. As suppliers prepare for invoices to be paid 2-3 months from issuance, they have to account for the rising cost of inflation, fx fluctuations and higher transfer costs to their local currency.
Did you know?
PingPong is strategically positioned to allow companies to be able to process international suppliers payments in real-time.
Below are a few of the benefits Chinese suppliers & customers receive from PingPong:
PingPong has the ability to allow both customers and suppliers greater access by opening mainland, saving both sides on the transaction. What do we mean by this? With PingPong, customers avoid wire fees, and their suppliers can be paid in local currency without a conversion fee and in real-time!
Paying Chinese Suppliers in Their Domestic Currency
Many people believe that we hold their customer's hard-earned money in our bank accounts. This couldn’t be further from the truth. In fact, tier one banks like HSBC, CITI, WellsFargo, Fidelity, and Chase hold our customers’ money. We prefer this method of holding funds because it provides our customers with the highest level of security and trust.
For a flat, and transparent cost, PingPong enables eCommerce merchants and businesses to send money to more than 170 countries in any currency. This is convenient for you and your suppliers, as your suppliers commonly accept USD, taking the foreign exchange fee, and trying to cover other fees that may arise.
When it comes to paying suppliers, many rely on using money-sharing apps and wire transfers. While this is common practice, many fail to understand the risks.
Did you know?
In the last year, the largest wire fraud in the country occurred and it cost America $1.8 billion. When it comes to wire transfers, they are virtually untraceable. This means once you’ve hit send, that money is gone and the likelihood of recovering an incorrect wire or finding its destination is slim to none.
Mistakes occur on a daily basis in everyone’s lives. But when it comes to sending wires, you have to be meticulous and check that all of the information that you have provided or that was given to you is accurate. It’s not uncommon for people to spell a name incorrectly, get a number out of place, or accidentally send 100,000 instead of 1,000 - it could be 3 weeks or more before you are able to recover your money. That’s if you can.
Many money-sharing apps charge fees between 3-6% to send money. A supplier will likely want the payer (seller, eCommerce merchant, business owner, etc.) to pick up that cost. If you’re in the United States and you need to pay a supplier in China, you’re more than likely to incur more fees.
KYC (Know Your Customer) - Why this is important
What is KYC?
KYC stands for Know Your Customer and sometimes Know Your Client. KYC or KYC check is the mandatory process of identifying and verifying a client's identity when opening a financial account and periodically over time. In layman’s terms, financial businesses and institutions must make sure and follow the proper procedures, to fact-check that their clients are who they claim to be. Financial businesses and institutions may refuse to open an account or halt a business relationship if the client fails to meet minimum KYC requirements. The procedures fit within the broader scope of a bank's Anti-Money Laundering (AML) policy.
PingPong implements KYC for every customer in order to prevent money laundering; ensure the person you’re doing business with is who they say they are, and match suppliers to their company name, bank accounts, and passports. This means your supplier has to pass security checks before PingPong gives you the green light to start paying them.
This is what PingPong provides its customers. This extensive layer of protection gives you more confidence to send money to a supplier than blindly sending a wire transfer to a name and account number you’ve been given by a person you’ve never seen or met.
Traditional methods for making supplier payments can take forever; banks charge astronomical wire fees and suffer time delays, handling fees, and reconciliation issues. Not with PingPong. PingPong allows you to sign up for a free account, make direct payments using your currency account, reach 170 customers globally, and authorize real-time transfers to recipients around the world.
How to safely operate on eCommerce sites:
There are a few universal best practices to keep in mind when it comes to choosing a supplier, paying them, and safely receiving your goods. To make it easy, we’ve compiled most of them here.
Common Best Practices
Payment Agreements - The most commonly accepted agreement we see when it comes to striking a deal with suppliers is a 30/70 contract. What does this mean? It means you’ve found a supplier you want to buy goods/products from (you may have even had several different suppliers send you samples by this stage), you’re going to order 1,000 goods/products from them, and it’s time to show them you’re serious.
Never Send 100% payment Up Front!
Why? Because you don’t know these people and you don’t have a prior business relationship with them. They live in a different country and you haven’t met them. Pay 30% of your invoice upfront - to start production, and the remaining 70% later when production is complete. Think about it. If anything goes wrong for any reason, you’ll only be out 30% of your money instead of 100%.
There’s an additional step before you should sign off and send the remaining 70%.
Production -> Inspection -> Production Completed
The supplier says they have everything ready. They’re prepared to ship to you or to an Amazon warehouse (if doing FBA).
Hire someone to do an inspection on what you ordered
Don’t blindly accept and store or ship your goods to a warehouse without doing this. Always hire someone to ensure you’re getting exactly what you ordered. An inspector can check all sorts of things such as packaging, barcodes, labeling, product quality, and so much more.
A lot of sellers do this for at least the first 3 orders when working with a new supplier. Also, double-check that you aren’t violating infringement laws/risks, while also confirming patents and trademarks. If another brand is selling a similar product, you want to make sure legal action won’t be taken against you for attempting to sell that product.
Are you ready to get your free PingPong account and begin paying your suppliers in China? Click here to check out more info and to get a new sign-up offer!