Is your SME business trading international, or are you looking to move beyond Singapore to grow your business and opportunities? If yes, you are probably spoilt for choice from the wide range of multi-currency accounts by various service providers.
You might be wondering why having a multi-currency account is important and how they can help in your business. In this article, we will highlight 6 key benefits of holding a corporate multi-currency account.
1. Reduced transaction costs
If you hold separate accounts in different countries, each bank may charge a fee for operating the account. This makes the transaction chain more complex and often less transparent, giving rise to higher hidden charges as the payment is processed through correspondent banks – that’s the banking network that moves money around the world.
A single multi-currency account will enable you to hold all the currencies on the same platform that cater to both your customer and supplier bases – and you pay just one account fee.
2. More favorable foreign exchange rates
Foreign exchange rates are volatile and tend to fluctuate greatly. It is important to use a favorable exchange rate because it ensures that you are able to receive as much foreign currency as you can after the conversion. For example, a conversion rate of 4.79 for SGD to CNY is more favorable than 4.50 since you are receiving 0.29 more Yuan for every SGD you convert.
Having a multi-currency business account provides a shield against the volatility of foreign exchange rates. The account works like a holding account where you can store different currencies. You can wait until there is a favorable exchange rate before converting from one currency into another. And if you have sufficient funds, you can also manage supplier payments by buying currency at a good rate and storing it in your account for future use.
3. Easier handling of multiple transactions
Multiple payments are a monthly occurrence, or even a daily occurrence for businesses. It is essential for businesses to keep track of their payments to avoid any hefty fees that might be incurred from late payments. For businesses that operate in different countries, they have to handle transactions of different currencies to various locations.
With a multi-currency account, the administration and tracking of transactions will be much easier since everything is streamlined in the same place.
4. Increased processing speed
Undoubtedly, cross-border payments have a longer processing time than domestic payments. However, one way to speed it up is through dealing in local currencies corresponding to the recipient country. The transactions will be faster and more efficient because you are accessing local payment networks rather than an international payment network which involves more intermediary banks. By holding a multi-currency account, you can have ready access to the different currencies that you need when you are making an international payment.
Moreover, having a digital multi-currency account that is operated online or via an app ensures that you have immediate access to your account wherever you are.
5. Strengthen your relations with your suppliers
With foreign currencies stored in your multi-currency account, you are able to readily access them for international payments to your suppliers. Quicker payments in local currencies of the suppliers will build your credibility and develop trust. This can translate into your suppliers offering you more favorable terms for your business (e.g. later payment deadlines, more discounts for bulk buys etc.).
A multi-currency account is a necessity for businesses that are considering expanding internationally. Business owners should choose an account from the service provider that provides the most suitable terms and functions that resolves their needs.