6 Benefits of Multi-currency Business Accounts for International Trade

The world has internationalised and businesses of all sizes are now reaching customers worldwide. But when you buy and sell outside your domestic market, you need to pay attention to payments. If you have an account that can handle only one currency, your profits may be dented by exchange rate fluctuations and high transaction fees. In this blog post, we discuss the benefits of having a multi-currency account for international trade. Spoiler alert: it can save your business a lot of time and money.

What is a multi-currency account?

A multi-currency account is a single bank account that allows you to hold and transact in multiple currencies at once. For example, if you are a UK-based business and you frequently sell products to customers in the US and Europe, you could hold GBP, USD and EUR in your account.
Each currency is essentially held in a wallet or a sub-account.

With the right provider, opening a multi-currency business account is
straightforward. You can set up an account after passing a few standard
KYC checks and start reaping the benefits straightaway.

Let’s look at the top six benefits of using a multi-currency account to
support international trade.

1. Reduce foreign exchange losses

Many businesses have just one account which can pay and receive foreign currencies only when they are converted to/from British pounds. These businesses are at the mercy of the markets when it comes to the exchange rate. When rates are unfavourable, this can eat away at your profits.

With a multi-currency account, on the other hand, you can choose to be paid in the currency of your choice. If you have customers in the USA, they can pay into your account if it accepts dollars. Instead of
converting the money to GBP, simply hold the dollars and use them to pay suppliers in the United States, avoiding foreign exchange issues entirely.

Since a multi-currency account is a holding wallet for each currency, you can wait until the exchange rate is good enough to convert from one currency to another. If you’re particularly savvy, you can buy currency at a favourable rate and store it in your account for future use. This way, you can make the fluctuations in the market work for and not against you.

2. Reduce transaction costs

When you operate out of one account or hold separate accounts in different countries, each bank will charge you for currency conversions and international payments. These fees are not always transparent. In fact, banks often make a hefty profit from these fees.

A multi-currency account could reduce these costs or eliminate them altogether by allowing you to send and receive money in the same currency. When you do need to convert your funds between accounts, you can generally do so at a low percentage, which is often much less than the costs you would be charged by your bank.

3. Streamline your accounting

If you have customers in multiple countries, chances are you’re also dealing with complex accounting systems involving currency gains and losses and the reconciliation of many accounts. This can create a lot of unnecessary admin work and make it difficult to get an overview of your business finances.

A multi-currency account can help streamline your accounting by providing real-time visibility of all your transactions in one place – without the effort of reconciling payments and receipts across different
currencies. This makes it much easier to track your spending, manage your cash flow and prepare your accounts.

Choose a multi-currency account provider that integrates with accounting software such as Xero or Quickbooks, and it becomes even easier to stay on top of your finances. This is a huge benefit for businesses that operate internationally, as it can save a lot of time and money on accounting fees.

4. Build trust with suppliers

If you’re a small or a new business, it can be difficult to establish trust with new suppliers. This is especially true if you’re based in a different country.

However, having a multi-currency account shows that you’re a serious player in the international market. This can go a long way towards building trust and developing supplier relationships. It also demonstrates that you’re prepared to invest in the right infrastructure to support your international business, which can give suppliers the confidence they need to do business with you.

5. Make faster and more efficient payments

International payments take more time than domestic payments, but if you pay in local currencies, transactions will be quicker because you’re using local payment networks.

How much quicker? Well, cross-border bank-to-bank payments can often take 2-3 days or longer. But with some multi-currency account providers, you can make real-time or near real-time local payments in multiple currencies, which is a huge benefit for businesses that need to move money quickly.

6. Deliver great customer experience

When selling to customers in different countries, you must be able to accept payments in the customer’s home currency. Customers expect this and will be put off if they see that you can only accept payments in your own currency.

By using a multi-currency account, you can give customers the option to pay in the currency of their choice. This is not only more convenient for them, but also helps to build trust and confidence in your business. When it comes to customer satisfaction, that’s priceless.

Is a multi-currency account right for you?

Multi-currency accounts are a great way to support your business as you expand internationally so if you’re not already using one, it’s time to start. They offer many benefits, from simplifying your accounting to helping you deliver a better customer experience.

So what are you waiting for? To find out more, check out Luminary’s multi-currency business account. It could be just what you need to take your business to the next level.

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