No matter where your firm is physically located, you probably already take advantage of all the benefits of a globalised economy.

Whether you source from international suppliers or have geographically-dispersed staff or contractors, you’re probably in the majority of executives that believe that pursuing new international opportunities is crucial to business growth.

But the numerous benefits of internationalisation are also tempered with some challenges, particularly in the area of international payments. The rapidly-growing international payments market is worth over 22 trillion USD. And with the increase of international trade, production and e-commerce, it’s expected to grow even further to around 39 trillion USD by 2022. One reason for this is the increase in the number of international transactions per capita from 0.5 in 2014 to 0.7 just five years later. Nonetheless, the payments landscape is also hampered by issues like high transaction fees, lack of transparency, confusing country-specific regulations, multiple intermediaries and long transaction times. In this milieu, businesses looking to expand beyond their borders demand payment solutions that enable cheaper, faster and more transparent transactions, fewer intermediaries and greater convenience.

If your organisation does international business, you probably make supplier payments or receive payments from international customers. This simple guide will tell you everything you ever wanted to know about a multi-currency account including:

·         What is a multi-currency account?

·         What are its advantages?

·         Does your business need a multi-currency account?

What is a multi-currency account? What are its advantages?

A multi-currency account, sometimes called a foreign currency account or borderless account , is especially useful for firms involved in international trade because it simplifies the way they make and receive payments to and from ‘foreign’ entities. Businesses can hold multiple currencies in one multi-currency account, similar to what they could do with a digital wallet. They can also easily convert the supported currencies, and send or receive foreign currencies. This flexibility is ideal for firms who wish to hold  foreign currencies, or want to send or receive money from abroad on a regular basis.

In brief, benefits of a multi-currency account are:

  • No need to open multi-currency bank accounts which require minimum balances and add hidden service charges. This is a huge benefit for companies looking to open a bank account in geographies where they don’t have the necessary supporting documents.
  • Hold your funds in multiple currencies in one place without any charges.  A multi-currency account adds operational efficiencies to your business as you can easily reconcile all your FX payments and receivables from one common wallet.
  • Make and receive payments in foreign currencies like dollars or Euros at much lower cost compared to regular international bank transfers.
  • It helps you streamline your foreign currency cashflows. You can simplify the collections and disbursement of funds without converting to the base local currency e.g. SGD in Singapore .
  • Get access to near mid-market rates and easily convert  between currencies when the exchange rates are in your favour.
  • No negative interest on holding balances of depreciating currencies like EURO.

Do I need a multi-currency account for my business?

If your business often manages multiple currencies throughout the course of operations, a multi-currency account will reduce your exposure to exchange rate fluctuations, and help you save on foreign currency transactions. Thus, a multi-currency account will be very useful for you in instances where you:

·         Engage in international trade: Both exports and imports

·         Sell goods online across borders: online (eCommerce) or offline

·         Employ foreign staff or work with foreign freelancers

Are a sole proprietor and work with international clients

How does a local multi-currency account work?

Say, you’re a Singaporean SME who regularly transacts with a vendor in Indonesia. Here’s how an international bank transfer will work:

  1. Your SGD will get converted into IDR. The amount received by your vendor will not be exactly equivalent to the original SGD amount, regardless of the exchange rate on the day of transaction.
  2. Your bank will charge a transaction fee and a foreign exchange conversion fee before completing the SGD-IDR transaction.
  3. If any other banks are involved in the transaction, they will also deduct their own fees. Ultimately, the difference between the SGD sent and the IDR received can be fairly significant.

Due to these fees and charges, the more transactions you initiate with your SGD, the more money you – and your recipient – stand to lose.

Here’s where a multi-currency wallet from Wallex can make a big difference. This account ensures that exchange rates work for you, not against you. Say you received some money from a client in the USA. If the SGD/USD exchange rate on a particular day is not in your favour, leave your USD in the account and wait for a more advantageous time. The reverse is also true. This way, you won’t need to worry about short-term currency fluctuations affecting your bottomline. These savings can really add up if you conduct frequent or large business transactions in foreign currencies.

Wallex Multi-currency Account: Created for Global Business

Wallex’ multi-currency account provides the cost-effective, convenient and fast cross-border payment alternative to expensive and slow international bank transfers.

Designed to simplify FX based accounts receivables  , the multi-currency wallet from Wallex enables you to easily hold, convert and pay using multiple  currencies while managing your FX risk. The wallet also connects your balances directly to our other cross-border tools for international payments, FX conversions and global collections so you can handle your funds easily, efficiently and safely. Moreover, the solution also helps you optimise your finance operations, manage liquidity and trade internationally much more effectively than before.For SMEs involved in international trade, importers/exporters and eCommerce sellers, opening this account requires no minimum balance or hefty monthly fees. Sign up for free with a multi-currency account from Wallex. To get started, click here.