Transacting in Canada: Why a local treasury solution matters

The Canadian market has long offered opportunities for U.S. companies, from vendors and suppliers transacting in Canada to new customer bases. In fact, close to half of all foreign direct investment in Canada is by U.S. firms, totaling $683.8 billion at the end of 2024.

“Canada is the natural spot for our customers to expand; we share a language and it’s geographically close,” says Alyssa Demers, U.S. Bank treasury product manager. “But many U.S. companies need local treasury solutions and accounts in Canada to transact there effectively.”

Sending paper checks and wiring payments between countries is the least efficient and most expensive way for businesses to make and receive Canadian payments, Demers says. However, with a Canadian treasury solution, you can streamline your in-country payments, lower your transaction costs, and even control your foreign exchange exposure.

Cross-border payment challenges in Canada

Canada and the U.S. may be close in proximity, but anytime a payment crosses an international border, new challenges arise. First, cross-border payments are often costly, incurring fees that average 6% of the transaction amount. And for companies with a high volume of payments, the costs can add up to a significant expense.

The slower speed of cross-border payments can also pose an issue. These payments can take one to five days, depending on the payment method. The visibility of transactions between two countries and multiple organizations can also make it difficult to track where the payment is in the process.

Finally, mitigating the risk of fraud and meeting various compliance requirements add another level of complexity to international B2B payments. For example, 45% of businesses reported they were the victim of vendor imposter fraud last year, and nearly a quarter experienced invoice fraud. U.S. Bank offers fraud protection services related to transactions in Canada, including debit block for received electronic payments and positive pay for check issuance.

The benefit of a local treasury solution in Canada

For U.S. companies doing business in Canada, a Canadian treasury solution can eliminate the challenges of cross-border payments – and offer unexpected benefits. “These solutions can help businesses transact more like a Canadian entity, with access to payment options familiar to their Canadian trading partners,” Demers says. A Canadian treasury solution provides the following advantages:

• Access to local accounts. A banking presence within Canada can streamline payments between vendors and suppliers, accelerating the payment timeline and providing improved transparency for each transaction. A local solution also provides access to multiple payment methods, ensuring you can receive and accept payments in the ways your customers and vendors prefer.

• Reduced transaction costs. The ability to pay and receive payments within Canada enables U.S. businesses to reduce or avoid the transaction fees associated with cross-border payments. Local payments also sidestep currency conversion, which can incur fees beyond the wire transfer.

• Accelerated receipt of paper checks. Nearly three-quarters of businesses still use paper checks for payments despite their inefficiency and cost. A Canadian treasury solution can accelerate the receipt of paper checks, eliminating cross-border mail that can lead to lost or stolen payments.

• Check issuance. Payee match and positive pay also help reduce fraud. Positive pay ensures only checks with correct numbers and amounts are paid. Payee match takes it a step further with technology that flags when fraudsters have erased the payee name and replaced it with another.

• Control foreign exchange exposure. There are benefits in billing foreign customers in their own currency. For instance, controlling the conversion helps U.S. businesses manage the volatility of foreign exchange rates, as well as the conversion rate.

• Manage provincial and federal tax payments. A Canadian solution can also make it easier to manage your in-country taxes, offering access to online tools that automate the payments process and ensure that your payments are on time and accurate.

By tapping into a Canadian treasury solution, your company can avoid the pitfalls of cross-border payments – and, at the same time, take advantage of local payment methods, currency conversion, and improved cash management.

Selecting your Canadian treasury partner

While there are multiple options for Canadian banking partners, Claudia Flores, U.S. Bank vice president and senior product manager, notes that choosing the right one can make a big difference. As you consider Canadian treasury solutions, she recommends prioritizing the following:

• An organization with access to U.S. and Canadian banking systems. Managing multiple accounts across various financial institutions only adds complexity when simplifying your cross-border payments is the goal. Having one central contact for your U.S. and Canadian treasury needs allows you to:
  • Easily implement solutions, access customer service, and manage billing within the same organization and platform.
  • View your global cash position via one convenient platform, enabling more thoughtful and timely decisions regarding your organization’s cash management.
• Access to a full range of Canadian treasury solutions. “Your organization’s treasury needs in Canada may evolve, and you want a banking partner with a range of solutions that meet your needs today and in the future,” Flores says. For example, a comprehensive suite of treasury tools should include:
  • Options for CAD and USD-based accounts
  • Online bill pay for registered Canadian vendors
  • Electronic fund transfers for employees and suppliers
  • Ability to send and receive wire transfers
  • Access to local branch deposits
  • Lockbox services with image-enabled check receivables and exception management
  • Zero balance accounts with automated end-of-day transfers
• Canadian banking, compliance, and payment expertise. Access to Canadian experts ensures that your organization remains updated on provincial and federal regulations, taxes, and more that could impact your payments.

Global business remains a complex endeavor, even with your nearest neighbor, but the right treasury tools and expertise can help. U.S. Bank’s Treasury Management gives our customers access to a full suite of Canadian treasury solutions that make cross-border business much easier.

Connect with a U.S. Bank representative to learn more about our Canadian banking partnerships and the Canadian treasury solutions available to your business.