Insight

Doing business outside the U.S. can bring big benefits—and distinct operating risks and complications. Two common pain points: Volatile exchange rates between the U.S. dollar and foreign currencies can threaten profit margins, and international bank accounts can be an expensive hassle to open and maintain.

Multi-currency accounts—which allow businesses to hold up to 34 foreign currencies in one account with zero fees—offer clear benefits on both these fronts. They also help create a better customer service experience by letting foreign customers pay in their own currency. 

Let’s look at the benefits of multi-currency accounts one at a time.

Manage FX Risks

Because multi-currency accounts allow you to hold multiple currencies in the same account, they are a great way to prevent market volatility from eating into profits. If the U.S. dollar exchange rate is unfavorable when you receive a foreign currency, there’s no need to convert it to USD. Just hold on to that currency until rates improve, or use it to make a payment in that market.

If you have cash on hand, you can also take advantage of favorable FX market conditions by buying directly into a multi-currency account. Then convert a foreign currency into USD or another foreign currency when the time is right. There’s no deadline for conversion—you’re in the driver seat, able to ride out bumps in the FX market and wait until a more opportune moment arrives.

Easy to Set Up and Use

If you’ve ever gone through the process of opening international bank accounts and became frustrated, that’s understandable. Overseas banks often require many different documents, and the process can be time-consuming. Moreover, these banks usually have monthly account maintenance fees and they can only hold one currency at a time. 

In contrast, multi-currency accounts are easy to set up, less costly to maintain and offer flexibility. Only the same basic documents you’d need to open a bank account in the U.S. are required. There are no account minimum balances and usually no maintenance fees. 

So if your business has customers in Europe (France, Germany, Italy), UK, Mexico, Japan, for example, you could replace or avoid having to create international bank accounts in each of those countries with one multi-currency account.

A Better Experience for Foreign Customers 

If your business doesn’t accept payment from international customers in their local currency, it is likely at a competitive disadvantage. Your overseas competitors probably do accept payment in the local currency. For customers, the ability to pay in their own currency is more convenient—and if the USD exchange is unfavorable, also more affordable.

A multi-currency account makes it easy to meet international customers where they are. All they need to know is the amount due and your account details. Accepting multiple currencies for payment makes it easier for customers abroad to do business with you. In an age when companies increasingly compete on customer experience—especially vis a vis ecommerce sales, which the pandemic dramatically boosted—the advantage is clear.

Key Part of Broader Strategies

Multi-currency accounts are one way to manage FX volatility—however, don’t overlook forward contracts, market orders and other hedging strategies. And they also aren’t the only way to improve the customer experience in your foreign markets—consider dual currency invoicing. 

All that said, a multi-currency account can be a key part of your business strategy to protect profits in foreign markets, reduce banking fees and improve customer service. Intrigued? Contact a TEMPUS market expert.

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