Multi-currency business bank account: Here’s what small business owners need to know

As a small business owner, life can get complicated when you start doing cross border business.

Making and receiving payments in multiple currencies can become a costly headache if you only have a standard bank account.

A multi-currency business bank account can make life much simpler in many scenarios – for example, if you trade products overseas, have international staff, contractors or suppliers, or work regularly with international clients.

It allows you to hold money and make and receive payments in several currencies all within one account.

You can therefore manage your international finances simply and flexibly, and convert currencies back to pounds easily when you need to.

In this article, we go into more detail on these bank accounts, how they work, and how to choose the right one for your business.

Here’s what we cover:

What is a multi-currency business bank account?

How a multi-currency business bank account works

Benefits of a multi-currency business bank account

How to choose a multi-currency account for your business

How to open an account and what you need

Final thoughts: Multi-currency business bank accounts make your life easier

What is a multi-currency business bank account?

A multi-currency business bank account is just like a standard bank account, but it allows you to hold, send and receive payments in whichever currency you need.

Some accounts only offer two or three currencies such as pounds, euros and dollars. Others support 20 or more.

As with standard accounts, each provider has different functions and services, eligibility criteria, terms and conditions, and perks and benefits.

How a multi-currency business bank account works

A multi-currency business bank account works just like a standard bank account but with the option to transact in different currencies.

So you can hold money, transfer, deposit, make payments and withdraw funds – at home or overseas – in the currency of your choice.

Usually, you can quickly and easily exchange money between currencies within the account, whenever you want.

As you’d expect, most offer online banking. Some, but not all, offer apps, debit cards, chequebooks, and overdrafts.

Some also offer different interest rates depending on the currency you hold.

As with a standard bank account, some transactions incur fees, such as for depositing or withdrawing payments in currencies over a certain value, or for deposits or transfers of currency notes.

Some multi-currency accounts have monthly charges, others don’t.

Benefits of a multi-currency business bank account

Companies who do business overseas often find themselves having to convert money from one currency to another and back again multiple times, incurring charges each time.

A multi-currency account removes the need to do this as you can keep money paid to you in say, euros to pay your Eurozone suppliers, saving you from leaking money on transfer fees and exchange rates.

This flexibility to exchange money when you want is useful at any time but particularly when exchange rates are volatile, such as during the Brexit process, trade wars, the pandemic or oil prices swings.

A good multi-currency account should also come with plenty of added benefits and functions such as money management features. These could cover instant payment notifications, functions for separating tax from overheads, and 24/7 support.

Ben Sztejka, founder of Your Ecommerce Accountant, says: “Exchange rates in multi-currency accounts are not necessarily better than in standard accounts.

“But they do generally have lower fees for converting money between one currency and another.

“These fees can mount up if you have to convert money several times as payments flow in and out of your business, so they can provide a significant saving.

“Or say you have a small e-commerce firm with suppliers and sales in Europe, US and the UK – you can manage your sales and supplier payments via that account and not have to worry so much about repricing products according to fluctuating exchange rates.”

An alternative to a multi-currency bank account is to use an international payment service, which markets itself as an even cheaper way to move money across currencies.

Some multi-currency accounts also allow you to take money out of a foreign ATM without large fees, but do keep an eye on the exchange rate as you would with a standard account.

Ben says: “My clients always look for a quick, easy way of transferring money and making payments on their phones. Digital challenger banks are disrupting multi-currency accounts as they are with every other aspect of banking.

“Traditional banks often levied high charges for having a multi-currency account. Also, they were sometimes not available for small to medium-sized enterprises [SMEs], just big corporates.

“Challenger banks offer that type of account to everyone.”

Critically for many businesses, some multi-currency accounts also link seamlessly and in real time with your cloud accounting software, and other third-party products and services, such as e-commerce software.

How to choose a multi-currency account for your business

Choosing the right account for your business depends on which currency you need.

Some just offer two currencies such as pounds and euros or dollars, others cover all three.

Many countries outside those blocks are happy to trade in dollars. But if they don’t and you do lots of business there, look for one of the more niche products that cover that currency.

Ben says another question is how much money you want to hold in the account, for example, as working capital.

He adds: “Before choosing an account, check all the administration fees to see how much you will likely be spending on currency transactions and other charges based on your trading volumes.

“Some multi-currency accounts may offer favourable exchange rates compared to sterling-only accounts, so check the rates and compare them to other banks and prevailing market rates.”

Don’t forget all the other factors you may consider when opening a standard bank account, such as service standards, support features, credit cards and overdrafts.

You may need to decide what balance you want between cost and service level.

How to open an account and what you need

Each bank has a slightly different process for opening an account. Many require you to have an existing standard bank account with them before you can open a multi-currency account.

Barclays’ multi-currency account requires existing customers to apply in branch. For NatWest, you need to ring up or contact your relationship manager if you already have one.

UK banks sign up to standard criteria for opening a business account, which includes an option for companies that trade overseas.

For a multi-currency account, the bank will require additional onboarding information from you and your business.

For example, it will need to look at the international nature of your business, including where your payments come from and to, what your business does, and who your customers are.

The more currencies in the account, the greater risk to the lender, so the more information they will need.

Final thoughts: Multi-currency business bank accounts make your life easier

Owners of small UK firms that trade internationally have enough to worry about – from changing international sales tax rules to trade tariffs and managing international suppliers and distributors. This has only got harder for many since Brexit and the pandemic.

A multi-currency business bank account takes away some of the stress by letting you manage your money in separate currencies, safely, more cheaply, and at any time that suits you.

But the key benefit is that many of today’s multi-currency accounts can even link seamlessly and in real time to your cloud accounting software, cutting yet more admin and cost and freeing you to focus on your business.