10 Benefits of Multi-Currency Accounts for Businesses

Navigating the complexities of international trade can involve challenges such as high transaction costs, exposure to currency exchange risks, and the inconvenience of managing multiple banking relationships. This is where the benefits of multi-currency accounts come in. They enable the management of various currencies under one roof, mitigating the need for numerous international bank accounts. 

Aimed at both emerging businesses venturing into global markets and established entities navigating multiple currencies, this concise guide will explain how multi-currency accounts can improve financial operations and facilitate international growth. Each section will not only highlight a specific benefit of multi-currency accounts, such as reduced transaction costs or enhanced expense management, but will also provide a real-world scenario that brings the advantage to light. 

We'll also explore how to create a multi-currency account on Verto. With support for over 50 different currencies, Verto's multi-currency account allows you to easily store, convert and transfer money globally.

Benefit #1: Reduced transaction costs: Multi-currency accounts can eliminate the need for multiple bank accounts across different countries, each with its own set of maintenance fees and minimum balance requirements. This consolidation results in lower overall transaction costs for the business. 

For example, a software company based in the UK that serves clients in the EU, US, and Asia can avoid having separate bank accounts in each currency zone. With a multi-currency account, it can transact in EUR, USD, and other Asian currencies, avoiding the fees for operating multiple foreign accounts, which could sum up to hundreds of pounds annually in savings.

Benefit #2: Efficiency in reconciliation and accounting: Managing financials becomes significantly more straightforward with multi-currency accounts. Businesses can issue invoices and receive payments in the same currency, which simplifies reconciliation and reduces the need for exchange rate adjustments in accounting.

For example, an event management firm that operates globally and charges clients in their local currencies can receive payments in different currencies and streamline accounting processes. As there are no currency mismatches when reconciling invoices and payments, there are fewer accounting errors and a more efficient month-end close process.

Benefit #3: Savings on foreign exchange fees: With the ability to hold and transact in multiple currencies, businesses avoid the repeated costs of currency conversion for international transactions, as funds are converted only when advantageous, reducing foreign exchange fees.

Think of an e-commerce retailer in South Africa that sells products to customers in Australia, Europe, and the US. Instead of incurring a currency conversion fee for each international sale, the retailer holds AUD, EUR, and USD in its multi-currency account, using the funds directly to pay suppliers in those regions, saving on conversion fees that could amount to 2-5% per transaction.

Benefit #4: Better supplier relationships: Paying suppliers in their preferred currency can lead to stronger relationships and potentially better terms. It removes the hassle and cost for suppliers to convert currencies, which can lead to a more amicable business partnership.

For instance, a furniture manufacturing company in Nigeria pays its Ghanaian timber supplier in Ghanaian Cedi, which spares the supplier from handling conversion costs or exchange rate risks. As a result, the Ghanaian supplier is more inclined to offer preferential supply terms and discounts, appreciating the hassle-free and reliable payment method. This strengthened business relationship leads to a more beneficial partnership for both entities.

Benefit #5: Faster transactions: Transacting in local currencies can expedite the payment process by tapping into local payment networks. With instant access from an app or online account, multi-currency accounts facilitate quicker transaction times and more efficient cash flow.

A good example is a freelance graphic design agency based in India can invoice and receive payments quickly in their client’s local currencies, leading to same-day settlements.