How Xflow is empowering Indian businesses across sectors

The landscape of international trade has transformed dramatically for Indian businesses. Economic growth, supportive government policies, and widespread digitization have opened global markets to companies of all sizes. What was once the domain of large enterprises is now accessible to businesses across the spectrum.

However, as Indian companies expand their reach, they encounter challenges in international trade, particularly when receiving payments from overseas. Let's explore these challenges across various industries.

According to a report by GoldmanSachs*, “India’s services exports grew from $53 billion to $338 billion between 2005 and 2023.” While this is a positive growth, here’s a look at how Indian businesses can grapple with challenges as they expand their global reach

1. IT service firms

India's flagship IT services sector, which encompasses software development, IT consulting, managed services, and SaaS, has long been a global player. However, reliance on traditional banking methods and slow wire transfers often lead to cash flow optimization issues, especially for firms handling large-scale projects.

For example, consider a mid-sized IT consulting firm based in Bangalore that recently secured a significant project with a US-based client. The project involves multiple milestones over six months, with payments tied to each milestone. Traditional wire transfers can take 3-5 business days to process, causing delays in receiving payments. This lag time between milestone completion and fund availability can strain the firm's resources, potentially affecting their ability to pay developers and other operational expenses on time.

2. SaaS companies

SaaS companies, synonymous with Indian innovation, are on a rapid growth trajectory. As they expand, these companies aim to provide their customers with frictionless payment experiences. To effectively support their subscription-based business models, they require improved FX standardization.

Take the case of a growing SaaS startup offering a cloud-based project management tool. They've attracted customers from Europe, North America, and Southeast Asia. However, they face challenges in providing a smooth subscription experience due to varying payment preferences in different regions and fluctuating exchange rates. Some customers prefer credit card payments, while others opt for bank transfers. The company struggles to offer competitive pricing across different currencies while maintaining their profit margins.

3. Funded startups

Many funded startups, often with headquarters abroad, regularly transfer funds to their Indian subsidiaries. They do this through the transfer pricing route to meet essential expenses such as payroll, marketing and operations. These high-growth businesses need reliability and speed in every aspect of their financial operations – from FX rates to flexible withdrawal of large amounts and simplified compliance.

Imagine a tech startup with its parent company in the US and a development center in Pune, India. The company needs to transfer funds regularly to cover payroll and operational expenses in India. They require a solution that not only provides competitive exchange rates but also ensures compliance with both Indian and US regulations. Moreover, as a fast-growing company, they need the flexibility to transfer varying amounts each month, sometimes on short notice, to capitalize on growth opportunities.

4. Freelancer/Soloprenuers 

Indian freelancers have built a solid reputation on global platforms like Toptal and Upwork. These solopreneurs, often working alone or with small teams, are sensitive to transaction fees and require quick access to their earnings to maintain healthy cash flows.

Consider a freelance graphic designer based in Mumbai who works primarily with clients in the United States and Europe. She earns an average of $3000 per month from various projects. However, she faces multiple challenges:

• High transaction fees eat into her profits, sometimes amounting to 5-7% of her earnings.
• Delayed payments due to slow international transfers affect her ability to pay bills and invest in new equipment.
• Fluctuating exchange rates make it difficult for her to price her services consistently and plan her finances.

5. Niche B2B marketplaces

B2B marketplaces are increasingly looking to integrate international payment offerings for their users.

For instance, an Indian B2B marketplace connecting local handicraft artisans with international buyers faces unique challenges. They need to ensure that artisans, often from rural areas with limited banking access, receive payments promptly and at favorable rates. Simultaneously, they must provide international buyers with familiar and secure payment options. The marketplace also needs to navigate complex regulatory requirements while keeping transaction costs low to remain competitive.

6. Small businesses

Many small businesses, particularly in the services sector, are building international customer bases. However, they often lack experience in handling high-value FX-led transactions. Issues such as cross-border compliance, FX volatility, and streamlined invoicing for foreign clients can hinder their expansion efforts.

Take the example of a small digital marketing agency in Delhi that has recently started attracting clients from the Middle East and Southeast Asia. While this expansion is exciting, it brings new challenges:

• The agency struggles with creating accurate invoices in foreign currencies
• They're unsure about the tax implications of their international income
• Fluctuating exchange rates make it difficult to price their services competitively while ensuring profitability
• They face delays in receiving payments, which impacts their ability to take on new projects and hire additional staff

7. Export businesses

Traditional export businesses, including manufacturers and traders of physical goods, face significant challenges when receiving international payments. Despite deep relationships with banks, they struggle with cash flow issues, foreign exchange volatility, disjointed payment pathways, and regulatory compliance, such as timely receipt of the crucial Foreign Inward Remittance Advice (FIRA).

Their challenges include:

• Long payment cycles of 60-90 days, which strain working capital.
• Currency fluctuations that can significantly impact profit margins on large orders.
• Compliance requirements, such as obtaining FIRA, which are crucial for availing export incentives but often delayed due to manual processes.
• High fees for international transfers, which eat into already thin profit margins in a competitive industry.

8. Fintech companies

Indian fintechs, with a projected market size of $1.5 trillion by 2025, are looking to integrate international payment offerings. They face the decision of whether to develop these capabilities in-house or partner with experienced providers who can complement their existing services without compromising brand equity or stakeholder trust.

They face several considerations:

• Building in-house capabilities would require significant investment in technology and compliance infrastructure.
• Partnering with an established cross-border payment provider could accelerate their market entry but raises concerns about data sharing and customer ownership.
• They need a solution that integrates seamlessly with their existing platform to maintain a consistent user experience.
• The company must ensure that any new offering aligns with their brand identity and maintains the trust they've built with their customer base.

1. Faster settlements

Xflow offers next-business day settlements making it easy for businesses to optimize their cash flow when engaged in large-scale projects.

1. No limits on transaction size

Businesses–of all sizes–can collect funds without any limits in a single invoice, including funds above $10000. 

1. Transparent pricing at zero forex (FX) rate margin

Minimal 1% transaction fee and no mark up on FX. FX rate is directly linked to mid-market rates, ensuring freelancers and businesses are receiving enterprise-grade pricing.

1. Live FX rate settlements

Xflow offers guaranteed live FX rate settlements ensuring complete visibility in the INR value of every payment.

1. Lock-in FX rate

Businesses and startups have the option to lock in a FX rate for upto 45 days before a transaction, thus protecting them from any future fluctuations in FX rates.

1. Simplified compliance

From invoice generation to eFIRA documentation, Xflow streamlines regulatory compliance without needing any additional support.

1. International payments infrastructure

Xflow’s robust API capabilities and white-labelled solution allow fintechs, businesses and niche B2B marketplaces to seamlessly integrate international payments into their platforms.

As Indian businesses increasingly venture into global markets, they face unique challenges in managing international payments. Modern solutions like Xflow are addressing these issues by offering faster settlements, competitive pricing, simplified compliance, and robust payments infrastructure.