Your first transaction sets the course

When a company looks at a new way to pay or get paid abroad, it usually looks at a single payment. But almost no operation happens only once, and what weighs over the year is the total, not the payment.

Not long ago, the manager of a mid-sized company explained why it wasn’t worth reviewing how he paid one of his suppliers: “It’s a small payment, about eight thousand dollars.” I asked how often he made it. He thought for a moment: “Every two weeks, more or less.”

Eight thousand dollars every two weeks is almost two hundred thousand a year. It wasn’t a small payment. It was one of the largest flows in his treasury; he had just never seen it added up.

A payment is a snapshot; a flow is the movie

A payment is what shows up on the statement on a given day. A flow is that same payment repeated over the year. Most treasury decisions are made by looking at the snapshot: the fee on this transfer, today’s exchange rate, this month’s urgency. But what moves the company’s results is the movie.

A payment gets solved. A flow gets designed.

The question almost nobody asks: how many times a year does this happen?

The math is simple: the amount per payment multiplied by the number of times it happens in a year. We’ll call that the annual weight of the operation. It doesn’t need accounting precision; a reasonable range is enough to start.

This is where a useful distinction comes in. A one-off operation happens once or very rarely: an advance payment, buying a piece of equipment, a capital contribution. A recurring operation repeats: supplies, services, payroll abroad, customer collections. A payment with no fixed date that still shows up five or six times a year is also recurring. What matters isn’t the calendar, it’s the repetition.

The difference isn’t just a matter of form. A one-off operation is evaluated once. In a recurring one, any cost, delay or friction is multiplied as many times as it repeats.

Let’s run the numbers on a case

Think of a fictional distributor that buys supplies from two overseas suppliers: one in Asia that bills in dollars and another in the region that accepts USDT. It already has both operations identified. Now let’s add the frequency:

The manager had focused all his attention on the packaging payment, because it was the largest and the one that worried him every quarter. But the “small” raw materials payment weighs almost twice as much over the year.

It’s worth seeing what happens with a tiny difference. One percentage point of the total cost of a USD 8,000 payment is USD 80: nobody stops for that. Over the year, in that single operation, it’s USD 1,920. Across both operations, USD 2,920. The same happens with time: a two-day delay per payment, in an operation that runs every two weeks, adds up to forty-eight days a year with money in transit.

The exact number matters less than the change in perspective. The operation that looked secondary was the one that most deserved attention.

Operations come in families

When a company writes down its first operation carefully, its relatives almost always show up: another supplier in the same region, the same supplier with another product line, a customer who pays along the same route in the opposite direction.

A simple exercise: take your accounts payable and receivable from the last six months and group them by counterparty, country and currency. You don’t need a special tool; the payments report and a spreadsheet are enough. At the distributor, that review revealed a third operation: a customer in the region who pays invoices in dollars once a month. It was the same route, in reverse.

An isolated operation gets solved one at a time. A family of similar operations justifies thinking about a structure.

Sizing is not deciding

It’s worth being clear about this: knowing how much a flow weighs doesn’t tell you whether you should change how it’s done. It only tells you how much attention it deserves.

If the annual weight is low, the effort may not be worth it. Changing a route has its own cost: paperwork, internal adjustments, telling the counterparty and learning a new process. If the annual weight is high, it’s worth calmly comparing the current way with the alternatives: how long it takes, what it costs in total, how much control it leaves you and what currency exposure it implies. We’ll cover that analysis in an upcoming article.

Ranking operations by annual weight doesn’t mean you have to start with the largest one, either. It often makes sense to start with the one that is best defined and repeats, because it’s the one that shows comparable results the fastest.

Three questions for your list of operations

If you’ve already written down your first operation, or are about to, try to answer these before making any decision:

1. Does this operation happen once, or does it repeat?
2. If it repeats, how many times a year and for how much?
3. Which other operations in your company look like this one?

With those three answers you no longer have a payment. You have a flow, you know how much it weighs and you know what to compare it against.

Hernando Trinidad is Customer Success Manager at efy and helps companies organize their international operations. The case and figures in this article are illustrative.

This content is for information only and does not constitute legal, tax or investment advice.