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Payments Without Borders: Why Your Company Needs a Multi-Currency Account When Doing Business Overseas

This blog post highlights the benefits of having a multi-currency account for businesses.

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Increasingly, businesses operate across borders and need account solutions that let them send and receive wherever their clients and business partners are based.

Traditional single bank accounts mean paying currency conversion fees on every transaction. But with the rise of multi-currency accounts, this is no longer the case.

Here we set out five benefits of using a .

Related: Thinking About Doing Business Internationally? Tips for Handling Multiple Currencies

What is a multi-currency account?

A multi-currency account allows a business to receive, send and hold money in more than one currency. This distinguishes it from a single-currency account, which always requires that money be converted to and from the "home currency" of the account.

Banks, neobanks or fintech companies can issue multi-currency accounts.

Note that a multi-currency account does not mean an every-currency account. The specific currencies that can be used with a multi-currency account are determined by the bank or fintech that provides the account.

Which business can benefit from a multi-currency account?

A multi-currency account can save time, money, and effort for any business that deals in several currencies.

A multi-currency account is beneficial for companies that:

  • Trade internationally via exporting and/or importing.
  • Run an ecommerce store that sells its goods in multiple currencies.
  • Hire staff abroad or work with freelancers overseas.

It's also beneficial for solopreneurs, independent contractors and freelancers that work with international clients regularly.

Related: How Borderless Payments Can Change European Business Forever

What are the benefits of using a multi-currency account?

Benefit #1: Reduce currency exchange fees

Perhaps the most important reason to have a multi-currency account is to reduce foreign exchange fees. In a single currency account, all payments received in other currencies or payments made in another currency will result in a currency conversion fee. In the case of banks, this fee can be substantial. For businesses working across more than one currency, these fees add up quickly and constitute a significant expense.

With a multi-currency account, money can be held in the 'non-home' currency: There is no need to convert, though, of course, the business can decide to do so — at a time of their choosing.

While there is often a small fee for converting from one currency to another within the multi-currency account, as the conversion needs to be made less regularly, conversion fees are reduced substantially.

Benefit #2: Streamlined reconciliation and accounting

One of the complications of operating a business in multiple currencies is managing the discrepancy between invoices in one currency and payments in another. Not to mention accounting for the extra currency conversion transaction on every payment or receipt.

With a multi-currency account, payments can be received in the invoiced foreign currency, meaning invoices and payments match, and there are fewer total transactions to account for. While amounts in foreign currencies may have to be rendered in the "home currency" for financial reporting purposes, this will only be required periodically (rather than constantly), and it usually doesn't need the currency to actually be converted.

Benefit #3: Manage currency fluctuations to your benefit

The last few years have seen some major currencies take substantial unexpected dips. As multi-currency accounts make it easy to do currency conversions at any time, a business can choose to convert currencies when the exchange rate is in their favor and hold off on doing so when the exchange rate is unfavorable.

By contrast, the business is forced to accept the consequences of any unfavorable fluctuation with a single currency account.

Related: 5 Ways to Save On Foreign Exchange Without Paying Massive Fees

Benefit #4: Combine with FX forward contracts to lock in prices

When a business has a contract with clients in a currency different from its home currency, it can be difficult to predict the final amount that will be paid. With a single currency account, the business is subject to whichever foreign exchange rate the bank or fintech applies at the time of payment.

By combining a multi-currency account with an FX forward contract, however, a company can receive and hold the payments in a client's chosen currency, then lock in a future exchange rate to convert to the home currency at a set later date.

Benefit #5: Simplicity of one account and interface

Without a multi-currency account, it may be necessary to hold multiple separate accounts in different currencies (foreign currency accounts). Transferring between those accounts creates unnecessary complexity for smaller businesses and makes it more difficult for entrepreneurs to have a "quick overview" of their financial status.

With modern multi-currency accounts, an intuitive interface makes it clear at a quick glance exactly how much money the business holds in each denomination.

Growing a business internationally requires a reliable mechanism for making and receiving payments in more than one currency. Multi-currency accounts allow businesses to save on foreign exchange fees and transfer money internationally more quickly and effectively.

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