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So you need to open a foreign currency account.
So far you've been able to manage everything just fine with a reliable local bank account. But as your business grows and expands internationally, you know that's not a sustainable strategy going forward, so it makes sense to look at a foreign currency account.
Or does it?
In the guide, we'll explain how foreign currency accounts work and what they're used for. We'll also share a different solution that may be better for you in the long run if you're expecting your business to continue expanding into even more regions across the globe.
What is a foreign currency account?
A foreign currency account is a specialised account that lets your business hold, send and receive funds in a currency different from your main (functional) currency.
For example, say your business trades in euros. You likely have a standard bank account denominated in euros. And if you want to send US dollars to a supplier, you can technically do it through your standard account, but you'll likely face hefty currency conversion fees since the account is mostly there for payments in a single currency — euros. Therefore, you may decide to open a foreign currency account denominated in US dollars. This account would let you hold, send and receive US dollars without needing to convert everything to and from euros with every transaction.
But what if your business works across multiple foreign currencies?
Can you manage multiple currencies with one foreign currency account?
Short answer — not really.
Foreign currency accounts are similar to standard bank accounts in that they primarily deal with a single currency — just a different one from your functional currency. Sure, you can eat the conversion fees and start paying suppliers in yen or pounds from a USD foreign currency account. But those conversion fees can really start to add up as your volumes grow, just as they would when using your euro account. So if you do business in multiple foreign currencies, you'd have to open multiple separate foreign currency accounts — one for each currency.
If you're only trading in two or three currencies, this approach could work fine. But as your business grows internationally and you need to send and receive more funds in more currencies, things can become a lot more complex.
If that sounds like your business, you may be better off using a multi-currency account instead.
What's a multi-currency account?
A multi-currency account lets you hold, send and receive funds in multiple foreign currencies with a single account. Plus, you can convert funds between each currency whenever you need to and see a consolidated total across all funds.
Think of it like having a global wallet with different pockets for euros, dollars, yen and any other supported currency you need. Need to send dollars? There's a pocket for that. Receiving a payment in yen? There's a pocket for that too. And you know how much you have across all pockets.
Multi-currency account providers
We can group multi-currency account providers into two main buckets:
1. Traditional banks
Many traditional banks offer foreign currency accounts as well as standard bank accounts. Some even offer multi-currency accounts, although it isn’t their primary focus, just one type of account among many.
2. Cross-border payment providers
Alternatively, you can open a multi-currency account with a dedicated cross-border payment provider. For businesses looking for more control over their international payments, transparent pricing and user-friendly technology, a cross-border payment provider is the smarter choice.
Check out our recent breakdown of cross-border payment providers vs traditional banks for a more detailed comparison.
Foreign currency accounts vs multi-currency accounts
As we've touched on already, foreign currency accounts focus on a single currency — one that's different from your standard currency. Multi-currency accounts exist specifically to make managing multiple currencies easier and more efficient.
What does this really mean for you?
1. Single-currency vs multi-currency focus
With a multi-currency account, you get long-term scalability, as the account grows with your business. Need to start working with a new currency? No problem — just open a new currency account inside your multi-currency account in just a few clicks.
2. Currency conversion and exchange rates
Converting money between currencies is seamless with a multi-currency account. Since all your funds in different currencies live under one roof, you can easily convert them from dollars to euros or yen as needed, all from one platform.
Since currency conversion is a core element of multi-currency accounts, you'll often get far more favourable exchange rates than you would trying to convert between standalone foreign currency accounts.
3. Visibility and control over each currency account
With foreign currency accounts, depending on which currencies your bank has to offer, you could wind up with multiple logins across different banks in order to open all of the accounts you need.
With a multi-currency account, everything is in one place. As a result, you'll often have far better visibility into your cash flow to improve your budgeting and forecasting.
Some multi-currency providers will also give you a consolidated view of all your balances in your home currency, so you always know exactly where you stand financially across all currencies — no spreadsheets or calculators needed.
Why multi-currency accounts are best for growing multinational SMBs
With a multi-currency account, you get virtually everything that a foreign currency account offers but with the added bonus of easily opening more currency accounts over time as your business expands.
What's more, a centralised multi-currency account can make everything simpler and help you keep more of your hard-earned profits. You get crystal-clear visibility of your global cash position and complete control over when you exchange funds and make payments.
Open a multi-currency account with iBanFirst today
So why choose iBanFirst? We're built specifically for businesses like yours. That’s why 10,000+ SMBs have already chosen iBanFirst as their multi-currency account provider.
With an iBanFirst account, you can:
- Hold, send and receive funds in 25+ currencies
- Track international payments and share tracking links with beneficiaries
- Work directly with dedicated FX experts who can help you manage foreign currency risks and build a strategy that works for your business
Ready to get started? Request an account today to join thousands of growing businesses already managing their international payments with iBanFirst.
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