Payment and costing
How the money moves.
An international transfer passes through intermediary banks, each of which can take a fee. That is why suppliers routinely receive less than the invoice, and it is a solvable problem rather than a mystery.
Why the amount changes.
A payment routes through one or more correspondent banks between yours and theirs, and each can deduct a handling charge.
The charge option on the instruction decides who pays: you, them, or shared. Shared is the default and it is what produces the shortfall.
Currency conversion happens somewhere, at a rate somebody chose. If you pay in one currency and they receive another, that spread is a cost.
None of this is unusual and all of it is worth settling before the first payment rather than after a short receipt.
What to agree with the supplier.
Which currency. Most Indonesian export trade is in dollars, and paying in rupiah moves the conversion risk to you.
Who bears the bank charges, stated on the invoice. If they need the full amount, you pay the charges and it should be priced in.
The exact account details including the intermediary bank where one is specified. Getting this right first time avoids a returned payment and two more sets of fees.
That the account name matches the company name on the contract. This is the single most important fraud check and it is free.
The fraud you actually have to worry about.
Changed bank details arriving by email, usually with an explanation about an audit or a frozen account. This is the most common loss in international trade and it is entirely preventable.
Verify any change of account details by voice on a number you already had, never on a number in the email requesting the change.
Be suspicious of a first payment to an account in a different country from the supplier, or to a personal name.
Send a small test payment before a large first transfer. The fee is trivial against the exposure.
Questions buyers ask.
Why did my supplier receive less than I sent?
Intermediary bank charges, almost always, under a shared-charges instruction. Agree who pays them and instruct accordingly, and price it in if you are paying.
Should I pay in dollars or rupiah?
Dollars is the norm for Indonesian export trade and it keeps the conversion on their side. Paying in rupiah moves the currency risk to you, which is only sensible if you actively want it.
The supplier emailed new bank details. What do I do?
Call them on a number you already had and confirm by voice. This exact scenario is the most common way money is lost in international trade, and the email will look completely genuine.
Read next.
Paying an Indonesian supplier
T/T, letters of credit and documentary collection, what each actually protects, and the five rules that stop a deposit disappearing.
How importers lose money in Indonesia
Six recurring patterns, from credentials that are not export documents to borrowed registrations, and the five checks that catch them.
Currency risk on an import order
Most Indonesian export trade is in dollars, so two currencies move against you. Where the exposure sits and what reduces it.
Trade finance, in plain terms
The gap between paying a producer and being paid by your customer is where importers run out of money.
Screening who you deal with
Checking who is on the other side of a transaction is an obligation. What it involves.
Sourcing from Indonesia?
Tell us the product, the quantity and the destination. We come back with what it involves before anyone talks about money.