How A Multi-Currency Account Can Spur Start up Growth
Start-ups face many challenges in their first year of operation and then manage to find solutions after that. But one challenge that can go past the first year is their financial operations. As your business grows, you start receiving and paying more money than before, which means you need to have a better financial system to handle all the transactions. During the expansion, the business will start operating abroad, which means they’ll have to pay international vendors or receive money from other countries.
As the world’s financial markets become increasingly interconnected, it’s no longer enough for companies to have a single currency account. Instead, they need an account that allows them to transact in multiple currencies — and one that can be used both locally and abroad.
With a multi-currency account, your business can open up new markets and tap into new opportunities worldwide. Here are ways this kind of account can boost your start-up’s growth:
1. Reduce Cross Border Transfer Fees
No matter what type of business you run, there will be times when you need to send money overseas. Whether paying suppliers or employees, reducing cross-border transfer fees will save you time and money. One of the biggest benefits of opening a multi-currency account is reducing cross-border transfer fees.
For example, if you want to pay vendors abroad, you can use a multicurrency virtual card payment system. This card will allow you to send money between countries without incurring any additional charges on top of whatever it costs to move funds between accounts at your financial institution. This makes it easy for businesses who want to expand across borders and increase their reach without worrying about being charged extra fees every time they send money overseas.
2. Improve Cashflow Management
Cash flow is the lifeblood of any business, but it’s especially important for start-ups. As a new venture, you’re likely to be working on a shoestring budget, and you may not have access to traditional loans or lines of credit. That means cash flow management is essential to keeping your business running smoothly.
One way to improve cash flow is by using a multi-currency account. With this type of account, you can receive payments in different currencies without converting them yourself. Your bank will do it automatically at the best exchange rate available at that moment in time.
For example, if you’re based in Europe and sell products or services globally, a multi-currency account would allow you to receive payments from foreign customers directly into your account. This means you don’t have to worry about converting their payment into euros before depositing it into your bank account. You’ll have easy access to money in whatever currency you want.
2. Avoid Currency Fluctuations
Currency fluctuations are a major concern for many start-ups. These exchange rates have a huge impact on profitability. Suppose you accept payments in one currency but pay suppliers in another. In that case, your exchange rates must be kept in check so that fluctuations in value don’t erode any profit margins. This can be done by keeping all foreign currency accounts under one roof with a multi-currency account.
It will allow you to hold different currencies, hence avoiding foreign exchange (FX) rate differences. If one currency weakens, you can still use another currency to complete the transactions, avoiding losing your profits through unfavorable FX rates.
3. Receive Payments Faster
If you’re an eCommerce business or a start-up that sells to customers worldwide, then it’s likely that you’ll be receiving payments from customers in different currencies. The problem is that most banks don’t accept transfers in different currencies. This means that you will have to wait for the funds to arrive in your local currency before you can use them. This can be a problem if you depend on that money to pay suppliers and workers or purchase new inventory. You might be forced to take out a loan or put your transactions on hold until the funds are cleared, which may be detrimental to your business.
However, with a multi-currency account, you can instantly receive money from anywhere in the world without having to worry about conversion rates or foreign exchange fees. When customers find it easy to make payments to your business, the purchase process becomes easy, and the number of abandoned carts reduces. Remember that more buyers mean more business growth.
4. Accessing Foreign Markets
If you’re a start-up looking to grow your business, chances are, you’ve already explored the option of expanding overseas. But this isn’t always easy without the right tools and knowledge. That said, you need to learn how to manage your cash flow, currency fluctuations, FX rates, and inflation rates in those countries. Moreover, you also need to have a system to support incoming and outgoing payments in those areas. In addition, you also need to connect to vendors, buyers, and investors in that country.
Transferring money from a multicurrency account can help businesses become more efficient and flexible as they expand into new markets. It also makes it easier for businesses to maintain accurate records of how much they have in different currencies at any given time.
Managing expenses and revenues in different currencies is another advantage of using a multi-currency account. This will make it easier to keep track of your business’s finances, particularly if you operate internationally or plan on expanding into new markets in the near future.
5. Paying Employees Internationally
As a small business owner, you might be paying employees abroad or outsourcing work to freelancers across the globe. A multi-currency account allows you to set up international payments and allows you to track them all in one place. You can also make payments directly from your bank account into the local bank accounts of your employees — no need for expensive international wire transfers.
If your employees receive their payments in time, they become more satisfied with your management and this will help increase their productivity and, in turn, help to spur your growth.
Entrepreneurs today have a lot on their plates. With numerous business fronts to manage, it’s easy to get overwhelmed. Having a multi-currency business account is an absolute must for entrepreneurs who frequently trade in foreign currencies. The multi-currency account will offer several benefits, including expanding internationally and avoiding FX rates, among others discussed in this article.