A strategy for Canadian accounts receivable
According to the U.S. Census Bureau, U.S. companies sell more goods to Canada than any other country. Indeed, when a U.S. business looks to embark on a global sales strategy, it often looks first to our neighbor to the north.
To help U.S. businesses reduce collection costs and streamline accounts receivable management related to Canadian sales, some U.S. banks have forged relationships with Canadian banks. As a result, through the U.S. financial institution, a U.S. business can open a physical, in-country account in Canada that’s integrated with the company’s domestic treasury management experience.
This sort of arrangement enables Canadian buyers to pay U.S. sellers using Canada’s ACH-like low-value Automated Funds Transfer (AFT) system, which eliminates the need to use wire transfers and reduces transaction costs for everyone. Additionally, because the Canadian account is with the U.S. bank, the seller doesn’t have to enter a new relationship with a foreign bank, and opening the account is faster.
What’s more, the U.S. seller can use multibank reporting through its domestic bank to view its Canadian transactions, just like it views domestic payments. Funds can also be easily concentrated into the seller’s U.S. account.