How to maximise the benefits of multi-currency transactions

Expanding your business into international markets brings many strategic advantages, but it can also add complications to operations and finances. In this blog, we’ll discuss how to manage multi-currency transactions effectively, minimise the accounting risks and leverage the benefits. 

What are multi-currency transactions?

Multi-currency transactions refer to sending and receiving payments involving two or more different currencies. For example, companies operating in the United Kingdom that sell to customers in the United States, or receive wire transfers from a vendor in Italy. In 2025, the percentage of businesses operating online is projected to reach 29.9%, making multi-currency payments more essential than ever before. 

Which businesses need multi-currency operations?

Any business that operates internationally, whether that’s e-commerce brands selling to multiple countries, freelancers invoicing clients globally, or SMEs with overseas suppliers, may handle multi-currency payments. Organisations that only handle domestic transactions won’t typically need multi-currency operations. If the companies have a low volume of international payments, forming a process will likely still be beneficial.

How do multi-currency transactions work?

Standard bank accounts will automatically convert any foreign currencies into your default currency, charging a conversion fee and using their set exchange rates, which are typically less favourable than market rates. Similarly, payment platforms like PayPal will usually apply conversion and payment processing fees. To avoid the associated fees, businesses can ask clients to pay in a chosen currency, but this can create confusion, potentially damaging relationships and leading to inaccurate conversions and delayed payments. Single-currency accounts may be suitable if conducting very few international transactions, but most companies will use multi-currency accounts to simplify the process. Multi-currency bank accounts enable businesses to send and receive numerous currencies in one place, hold the money until the market exchange rate is more favourable, and then convert the amount into various currencies without additional fees.

The benefits of multi-currency payments

There are several benefits of multi-currency transactions for businesses as well as their customers, clients, suppliers and vendors. Here are some of the main advantages:

• Competitive advantage: Enabling international purchases enhances your brand exposure, allowing people from all over the world to discover your company. This benefit will help you stand out from competitors who only operate in their local country.

• Diversify revenue potential: Reaching new customers across the globe creates opportunities for generating more income, such as through balancing out seasonal dips, targeting higher-spending and larger audiences, and producing tailored products for that market. Generating earnings in numerous currencies can also minimise risk, as the gains in one currency can often offset any losses from another.

• Speed and accuracy: Removing the need for manually converting payments into the preferred currency will quicken the process on both sides of the transaction, as well as minimise any mistakes made around the amount.

• Convenience: Customers are more likely to complete a purchase if the amount is automatically presented in their own currency, adding to the buyer’s journey experience.

• Enhancing relationships: As well as building customer loyalty with smooth purchase experiences, multi-currency payments can simplify the transaction process for any international employees, clients and vendors.

The challenges of multi-currency operations 

While there are many benefits to handling multi-currency payments, it can involve various accounting complexities that businesses should consider. For example: 

• Monitoring exchange rates: To take full advantage of multi-currency bank accounts, businesses will need to regularly assess the market conditions and relevant exchange rates to convert funds at the most advantageous times. Due to time differences, there’s also the possibility of an exchange rate changing from when an invoice was issued to when it’s paid.

• Custodial fees: Some multi-currency bank accounts will charge fees for holding balances in certain currencies, usually those from less commonly traded countries. However, widely used currencies don’t typically involve custodial fees.

• Regulatory and compliance requirements: Managing multiple currencies entails complying with various regulations, such as using authorised channels for currency conversion to meet the Foreign Exchange Regulations. Failing to meet these requirements can result in legal penalties, costly fines, reputational damage, and operational disruptions.

• Documentation difficulties: When handling numerous currencies, the paperwork is a lot more complicated, as each transaction involves the original currency and the converted amount, requiring twice the tracking. Accountants will also need to document the proof of exchange rate for the specific currency on the particular day and time. If the multi-currency documentation is handled manually, there’s also a higher risk of error, such as using the wrong currency, tax miscalculations, and incorrect or inconsistent exchange rates in reports (e.g., invoices, tax filings, contracts).

• Payment delays: International transfers can take longer to process than domestic payments, which may cause cash flow shortages if delays occur. Businesses can predict the payment timelines to an extent, but varying factors can cause delays, such as internal banking systems or inaccurate recipient information.

How to mitigate the complications of multiple currencies

Although there are challenges involved, businesses and accountants can lessen the risks with organised processes, professional guidance and appropriate tools. Below are some tips for staying on top of the complications:

Consult a professional

Seek advice from an expert on whether introducing multiple currencies is the best approach for your business. Financial advisors with international experience and International Business Advisors are examples of relevant experts within this field. Accountants can also seek external advice to help establish a multi-currency process from experts such as Foreign Exchange (FX) specialists, International Tax Specialists, and Compliance Experts. Professionals can also continue to advise on regulatory updates and the best time to convert funds.

Prepare sufficiently

Before implementing this payment option, ensure all relevant staff members are informed of the procedures and risks involved and are suitably trained to manage the different currencies. Work with your accounting team to create a clear process for handling the transactions and regularly review each step, tracking its success and assessing whether any changes are needed. 

Open a multi-currency bank account

Rather than incurring the bank’s set exchange rate and conversion fees from a single-currency account, accountants can open a multi-currency account to hold payments until favourable exchange rates occur.

Offset risks with hedging

When managing multiple currencies, hedging acts as a safety net to protect finances from plummeting exchange rates. Businesses can arrange for a ‘forward contract’ with banks, which is an agreement to guarantee an exchange rate for a specific amount of money at a later date. Another hedging method, ‘options’, gives the option to exchange currency at a set rate, but with no obligation if the current rate is better. Alternatively, ‘swaps’ are agreements between a business and another party (e.g., another business or a financial institution) to swap a certain amount of money in each other’s currencies at present and then return later at the same rates. Organisations can also engage in natural hedging by planning for incomings and outgoings in the same currency to offset each other.

Invest in multi-currency software

To ensure accurate and easy multi-currency payments, invest in a tool that supports this process, such as QuickBooks. Our award-winning accounting software supports 160 different currencies, with multi-currency functionality available on Essentials, Plus, and Advanced plans, allowing you to send invoices, track expenses and receive payments. This tool allows businesses and accountants to send bills and invoices in the recipient’s local currency and receive payments converted to the business’s preferred currency using real-time exchange rates. The multi-currency feature also provides automated reports and audit trails in the chosen currency, ensuring accurate documentation. With this enhanced visibility, you can easily track expenses, any losses and gains from exchange rates, and improve cash flow management. However, it’s important to complete research before making this decision, as users can’t turn off the multi-currency feature once enabled.

Introducing multi-currency payments is a strong business move for expanding your market and enhancing the transaction experience for all parties involved. However, it’s important to prepare for the accounting challenges that can occur to maximise accuracy, efficiency, and revenue.

The information on this website is provided free of charge and is intended to be helpful to a wide range of businesses. Because of its general nature the information cannot be taken as comprehensive and they do not constitute and should never be used as a substitute for legal, accounting, tax or professional advice. We cannot guarantee that the information applies to the individual circumstances of your business. Despite our best efforts it is possible that some information may be out of date. Any reliance you place on information found on this site or linked to on other websites will be at your own risk.