In today’s global economy, many businesses rely on multicurrency accounts to simplify international transactions and streamline expansion into new markets. With the growth of digital banking, multicurrency accounts have become even more popular for allowing businesses to easily manage different currencies within a single account. 

Whether you’re a small business startup or an established corporation looking to grow internationally, multicurrency business accounts can provide operational flexibility and convenience that traditional bank accounts can’t compete with. Their features extend beyond just sending and receiving money to offering real-time updates on exchange rates and lower currency conversion fees.

In this article, we explain what multicurrency business accounts are and how they can be used by businesses. We also dive into the many benefits of using a multicurrency account, as well as the limitations and challenges you may face when opening one. 

What is a multicurrency account?

Multicurrency accounts, sometimes called foreign currency accounts, are a specialized bank account that allows businesses to hold and manage funds in multiple currencies within a single digital account. Unlike a regular business bank account, multicurrency accounts allow organizations to work with different currencies without having to convert funds or manage separate accounts in various locations. This simplifies transactions and reduces currency conversion costs while also allowing businesses to consolidate their international financial activities in one central location. 

With a multicurrency business account, companies can receive payments in different currencies, make payments to suppliers or vendors in their respective currencies, and hold balances in different currencies without the need for constant conversion. Having this flexibility is especially useful for businesses who operate on a global scale or have operations in multiple countries. 

Many multicurrency business accounts come with added perks such as competitive exchange rates, real-time currency conversion, and tools for managing foreign exchange exposure. All of these features make it easier for businesses to manage their international finances.

Why use a multicurrency account for business?

There are many reasons why a business may choose to use a multi currency account. These include: 

• International transactions: Businesses that operate in multiple countries or conduct transactions with clients or suppliers abroad can use a multicurrency account to send and receive payments without the constant need for currency conversion. 

• Cost effectiveness: By avoiding constant currency conversion fees, businesses can save money on transaction costs associated with global payments. Multicurrency accounts also tend to offer competitive exchange rates, further reducing expenses related to currency conversion.

• Flexible payments: Multi currency accounts make it easier for businesses to pay suppliers, vendors, or employees from all over the world in their preferred currency. This is convenient for all parties involved and can improve relationships with suppliers and employees. 

• Risk management: Fluctuations in exchange rates can impact a business’s profitability. Multicurrency accounts allow businesses to hedge against currency risk by holding balances in different currencies in a single account. 

• Simplified accounting: Juggling finances across multiple currencies in separate bank accounts can be unnecessarily complicated. Multicurrency accounts streamline this process by consolidating balances and transactions in foreign currencies within a single account. 

• Global expansion: If a business is looking to expand internationally, multicurrency accounts can make the transition into new markets easier by providing the infrastructure needed to transact in local currencies. This can make market entry smoother and support a business’s growth. 

Multicurrency accounts vs other account types

To help you understand the difference between multicurrency accounts and other account types (i.e. savings and checking), we have made a comparison below. 

Benefits of multicurrency accounts

Multicurrency accounts offer numerous advantages for businesses that engage in international trade, have a global customer base, or operate across multiple countries. Here are some key benefits:

Cost savings

Holding balances in different currencies reduces the need to constantly convert currencies. This can minimize foreign exchange fees and transaction costs. Many multicurrency accounts, such as ZEN, also offer competitive exchange rates that allow businesses to save money on international transactions. Over time, these cost savings can add up to have a significant impact on a business’s bottom line. 

Flexible operations

With a multicurrency account, businesses can access different currencies quickly. This makes operations more flexible and efficient by streamlining cross-border transactions and reducing processing times. For example, a business using a multicurrency account can pay an overseas supplier or receive an investment immediately. 

Improved relationships

Multicurrency accounts don’t just benefit a business – they also offer advantages to key stakeholders. Companies using a multicurrency account can pay suppliers, vendors, and employees in their local currencies, adding convenience and enhancing the overall experience for recipients. As a result, a company might enjoy strengthened loyalty and more positive relationships with their stakeholders. 

Currency risk management

Fluctuating exchange rates can impact a business’s financial stability and profitability. Multicurrency accounts are a way for businesses to mitigate exposure to currency volatility by holding balances in different currencies and only converting funds when exchange rates are favorable. 

Simplified accounting

One of the key benefits of a multi currency business account is consolidating a company’s balances and transactions in different currencies within a single account. This makes it easier for businesses to manage and oversee their assets, resulting in more transparent and accurate financial reporting. On top of that, most multicurrency accounts offer online banking features that allow businesses to easily transfer funds, pay invoices, or check balances instantly. 

Business growth

Businesses looking to expand internationally will benefit enormously from multicurrency accounts. Instead of having to open a physical account in each country they plan to expand in, companies will already have the infrastructure in place to conduct business in new markets. That’s one less thing to think about when focusing on growth initiatives and reaching new international customers.

Convenience

One of the greatest benefits of a multicurrency business account is the sheer convenience of being able to manage all of your funds in one place through a single provider. In just one online platform, you can switch between currencies, access balances, and view transactions and statements whenever you need them. All with 24/7 access no matter where you are in the world. 

Limitations of multicurrency business accounts

While the benefits of multicurrency business accounts are plentiful, there are also a few limitations that can pose a challenge. These include: 

Complex management

Financial operations can be a little more complicated when you’re managing funds in multiple currencies. Businesses need to monitor fluctuating exchange rates and ensure they comply with accounting standards for multicurrency transactions. To manage this added complexity effectively, businesses might require more resources. This can pose a challenge for smaller businesses with limited resources.

Compliance with regulations

Businesses that use multicurrency accounts might have to meet compliance requirements in multiple jurisdictions, including those related to anti-money laundering (AML), know your customer (KYC), and tax regulations. In some cases, a company might need to meet regulatory obligations in each country where they conduct transactions. To navigate this, complicated recordkeeping and legal expertise may be needed.

Accessibility & availability

Multicurrency business accounts aren’t offered by all financial institutions, and some multicurrency accounts will only accept businesses from specific regions or countries. This can be challenging for businesses that don’t operate within these areas. On top of that, some multicurrency accounts might have restrictions on the number of currencies supported or countries where transactions can take place. This can pose some limitations depending on where your business trades. 

Exchange rate volatility

Many multicurrency accounts provide useful tools to manage currency volatility, but businesses will still be exposed to exchange rate fluctuations. In certain cases, sudden changes in exchange rates might cause one currency to lose value against the other, affecting a business’s profitability and financial performance. 

Integration difficulties

Depending on the multicurrency account a business chooses, there may be challenges integrating the digital account with existing bookkeeping or expense tracking software. There may be compatibility issues, data synchronization errors, or delays in updating account information across platforms. 

Do you need a multicurrency account?

If you’re unsure whether or not a multicurrency account will benefit your business operations, we’ve listed some questions you can ask to help you find out.

• Do you conduct transactions in multiple currencies? If your business regularly deals with suppliers, customers, or partners in different countries and currencies, a multicurrency account can simplify your financial operations. 

• Do you pay high currency conversion fees? If your business frequently converts currencies for international transactions and incurs high fees, a multicurrency account can help you save money by avoiding or reducing these conversion fees. 

• Do you want to hedge against currency exchange risks? Holding balances in multiple currencies within a multicurrency account can allow your business to hedge against exchange rate risks and manage currency exposure more effectively. 

• Do you plan to expand internationally? If your business is expanding into new markets abroad or considering international operations, a multicurrency account can provide the infrastructure needed to transact in local currencies instantly.

• Do you deal with complex international payment processes? If your business faces challenges with cross-border payment processes, like delays, high transaction costs, or reconciliation issues, a multicurrency account could streamline these processes and improve efficiency.  

• Are you looking for a more convenient way to manage international finances? Ultimately, multicurrency accounts offer a centralized platform for managing funds in different currencies, providing businesses with more convenience, flexibility, and control over their international financial activities. 

The best multicurrency account for your business

If you’re ready to streamline your business operations, expand into international markets, and make international payments easier than ever, ZEN is here and ready to help. Our multicurrency business account offers the ultimate flexibility for managing your company’s financials, including:

• Support for 28 currencies: Accept payments from your online store and pay contractors and suppliers in EUR, GBP, USD, and 25 other currencies.

• Multiple transfer methods: Decide which currency you want to make a transfer and choose a transfer method that suits your needs, including SWIFT and SEPA transfers as well as domestic payments / local transfers that save on currency exchange and other unnecessary fees. 

• Competitive currency exchange rates: Unlike banks and other financial institutions which set their own rates, ZEN allows you to exchange currencies at the lowest rate on the market. 

• No minimum balance: Load as much or as little as you like in your global account, with no minimum balance requirement. 

• Desktop + mobile app: Manage your company’s funds from our desktop platform or the ZEN.COM mobile app to always know how your business is performing. 

In our digital world, ZEN is a no brainer for businesses of all sizes. Speak to our dedicated experts and discover why it’s the best offer on the market.