Conducting your business in multiple currencies can be bewildering. The balancing act of juggling so many markets is sometimes too daunting a prospect for a lot of owners. However, multi-currency business needn't be as frightening as it seems. We've compiled a list of six common traps to avoid to make sure your ship is sailing smoothly while driving sales across the world.
1. Not fully researching your multi-currency account options
Holding a multi-currency business account can enable you to keep track of your Euros, U.S Dollars, Pounds and Yen all in one place and make deposits and withdrawals in each currency.
Multi-currency accounts often work out cheaper to use than opening separate accounts for each currency that you deal in - where banks may sting businesses by including monthly usage fees and minimum deposit requirements.
However, the convenience of multi-currency accounts is negated if you're paying over-the-top fees on transactions from specific countries. It's vital to explore your options before opening such an account with a UK bank because many offer different rates and services. For example, Barclays' multi-currency account charges a fee of £6 for transfers into any currency account over £100, while HSBC carries $6/€6 price for sending Dollars or Euros to a non-HSBC customer.
Be sure to take a moment for introspection. Revise how your business will use the money from its transactions and set up a multi-currency account that suits your needs best.
2. Failing to acknowledge bank fees in your cash flow
Making a sale overseas isn't quite the same as making a sale domestically, and sometimes this fact can get lost amidst budgeting figures and cash flow forecasts.
The cost of sending and receiving foreign currency has ramifications for your business model and branding. It's important to factor in these extra costs and work out a strategy to consolidate your profit margins, whether this can be achieved via higher overseas product or service prices or through maintaining existing prices in return for better brand awareness and custom.
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3. Not using the best payment processor for your needs
Businesses can benefit from looking further afield for their payment processors. While there are plenty of companies out there that offer multi-currency accounts, it's the specialist payment processors that can really help you out when it comes to conducting business beyond borders.
For example, specialist organization Allied Wallet is an award-winning brand when it comes to multi-currency payments. Through their services, you'll be able to operate in 196 countries worldwide with great security and excellent levels of support.
Other payment processors like Adyen and Paysafe are also great options that specialize in catering for companies that are looking to enter a global market. Each has their individual pros and cons, but all are very well equipped and knowledgeable about how to set your business up to succeed using multiple currencies.
4. Forgetting to translate your invoices
Invoicing in a foreign currency is a relatively straightforward process if done online. However, some business owners fail to bear in mind that they'll still need to present their accounts, in Pound Sterling, to the HMRC.
To prevent a potentially painful process later on, be sure to not only produce local invoices for clients and customers but have them fully translated and converted to GBP for taxation and VAT purposes.
5. Paying more as a 'high-risk' business
If your venture is classed as a 'high-risk' business it could have a tough time finding a fairly priced payment provider for multi-currency transactions. This is because some providers find it difficult to trust companies that are based in riskier industries or that have a poor credit record, and the ones that are willing to take 'high-risk' businesses on typically look for higher fees for doing so.
While the playing field is tougher for 'high-risk' businesses, there are alternatives, like Bitpay. With Bitpay, transactions can be made via the cryptocurrency Bitcoin before being converted to US Dollars. While cryptocurrencies couldn't be considered mainstream, Bitpay's 1% transaction fees mean that they make for a strong alternative option to provide for customers overseas.
6. Setting up a payment account that doesn't cover the currencies you need
It's important to make sure that your payment provider is able to cover transactions made in your chosen currency.
Make sure that your business plan provides you with a clear idea of which areas you wish to target, and check that your chosen provider is capable of dealing in said currency.
Remember that you could end up closing off your business from a market that's ripe to be supplied.