Are you already trading internationally, or maybe you’re looking to move beyond your home market so you can tap into overseas opportunities? If so, there are many benefits to opening a multi-currency business account. Here are just six of the key benefits:
• Reduced transaction costs
• Helps you manage foreign exchange
• Easier and more convenient for handling payments
• More processing speed
• Better customer experience
• Stronger supplier relations
Because the world has moved online, businesses of all sizes and descriptions are now reaching global markets thanks to e-commerce. But when you operate internationally, you need to think carefully about payments – for both buying and selling.
From transaction costs and FX volatility, to customer satisfaction and supplier relations, there are more challenges when you take commerce across borders. Which is why you need to consider a multi-currency business account.
As the name suggests, a multi-currency business account helps you to handle different currencies when you buy and sell outside your domestic market. For example, you can hold dollars, euros and pounds in one place. If you have an account that can handle only one currency, your profits and business performance may be dented by high fees and transaction complexities.
Creating a multi-currency business account is relatively straightforward. You can set up an account after passing a few standard security and verification checks, and today there is a wide range of payment service providers who will offer you multi-currency facilities as part of an overall payment package. That means there’s no need to deal directly with a bank.
Let’s take a closer look at the six key benefits of using a multi-currency account to support your business.
If you hold separate accounts in different countries, each bank may charge a fee for operating the account, and because the transaction chain is more complex and often less transparent, there may be hidden charges. You may incur additional fees as a payment is processed through correspondent banks – that’s the banking network that moves money around the world. A single multi-currency account enables you to hold all the currencies that match your customer and supplier bases – and you pay just one account fee.
Foreign exchange (also known as forex or FX) is another cost to bear in mind. With a multi-currency business account, you can manage forex volatility. If you have just one account – and let’s assume it can receive foreign currencies only when converted to British pounds – you may lose money if the exchange rate is not in your favour. With a multi-currency account, if you have customers in Europe, they can pay into your account if it accepts euros. Equally, you can pay any suppliers in euros.
Because a multi-currency account works like a holding account, you can wait until you have a good exchange rate before converting from one currency into another. And if you have sufficient funds, you can also manage supplier payments by buying currency at a good rate and storing it in your account for future use. Whether you’re buying or selling, a multi-currency account enables you to move money in the most cost-effective way.
Beware of major marketplace platforms that force you to convert money through them if you don’t have a multi-currency account. You could end up paying much more than the market rate.
When you’re running a business, operational efficiency is often the difference between success and failure. And when it comes to payments, which are the lifeblood of every business, cashflow and control are critical – all the more so when you operate internationally.
With a multi-currency account, administration is much easier because everything is in one place and streamlined. Monthly accounting is less demanding, without the headache of matching and reconciling invoices and receipts across different currencies, plus there are fewer adjustments for exchange rate differences. Nor will you have to juggle different accounts and different banks across multiple jurisdictions. Everything is immediately visible, in one account, so you can keep track of your receipts and disbursements. It’s much better housekeeping all round.
Turnaround speed is important for cashflow. Cross-border payments are usually slower than domestic payments, but if you can deal in local currencies, transactions will not only be more efficient, they’ll also be quicker because you’re accessing local payment networks. And with a multi-currency account that’s operated online or via an app, you have immediate access to your account wherever you are.
When your customers are happy with your payment method, you’re more likely to get repeat business. And if prospective customers can’t pay in their preferred currencies, you may lose sales altogether. It makes sense to have an online payments acceptance system that combines currencies and meets local expectations. If you’re trading in Europe, deal in euros. If people want to pay in dollars, accept dollars as the preferred payment method. Being international means being versatile.
Just as using local currencies will help your overseas customers, your overseas suppliers will thank you if you can pay them in their own currencies. You may even get more favourable terms if you accommodate their needs.
If you buy and sell overseas – or are thinking of doing so – a multi-currency account will put your business on a much better footing. Opening a multi-currency account is part of building the right online payment strategy for your business. To find out more about online payments, and choosing the right payment service provider, see our guide to online payments.