Managing Currencies

Blogs 9 Dec 2020

How to safeguard your small business by mitigating FX and currency volatility with local currency accounts and risk management strategies.

This content has been authored by Worldfirst and was correct at date of publication

Managing your multi-currency payments and receipts:

Trading internationally presents UK small businesses with a huge opportunity to access products and services from overseas suppliers, as well as the ability to attract new customers, in new markets. SMEs often consider foreign exchange strategies and localised currency accounts to be out of their reach and reserved for larger businesses. This guide talks to the various products available to smaller businesses, and their potential impact and importance they play in helping protecting profits.

Localised currency accounts

The emergence of online technology has made it easier for small and medium-sized enterprises to reach international consumers. International trade has become simpler. Marketplaces like Amazon have made it much easier to sell products in international markets and are showing rapid growth. This has led customers to become more comfortable with buying from overseas suppliers. However, the process of receiving payments from those customers, whether they come through from a marketplace, your own website, or offline, remains one that is in most cases, complex, expensive, and inefficient. Retailers can launch quickly in new countries, but often find it difficult to receive payments and repatriate funds, meaning profits are eroded by poor exchange rates and fees. There are numerous reasons for this:

  • Traditionally the acquisition of an overseas bank account is very laborious. You need a physical account in that territory. Local accounts require local presence; you may have to set up a subsidiary, or have a local agent, and this can be a difficult and lengthy process.
  • Many domestic currency accounts offered by high street banks also don’t offer customers the ability to invoice to an account in their buyer’s country. An international currency account provided by a bank isn’t local; although it can collect the currency, it may be difficult to plug in to local providers’ payment networks or incur additional clearing time/fees.
  • Built in marketplace and payment processor solutions for repatriation of funds is often expensive and gives little to no control over funds. This reduces the flexibility and timing of withdrawals and businesses may become dependent on choosing platforms offering this option to facilitate future expansion.

An option to overcome these issues is using a money transfer platform with the option of opening locally domiciled currency accounts that allow business to collect, hold and convert funds at will. By opening localised currency accounts, with routing details in the country of the currency being received, UK businesses can navigate many of these costs and restore control over their multi-currency income.

Platforms like WorldFirst’s World Account offer UK businesses quick and easy set-up of localised currency accounts, offering a rapid route to accepting payments in new markets, as well as a platform to seamlessly convert currencies and payout to suppliers almost anywhere in the world.

Enabling instant access to new markets as well as a secure payments infrastructure, World Account offers global account solution across 10 currency markets, without the need for local banking relationships.

For more information on World Account, please see

Currency Exchange

Currency market volatility and supply chain interruptions caught out hundreds of companies during 2020, highlighting the importance of effectively managing foreign exchange risks through a structured strategy.

2020 has seen major currency pairings, GBPEUR and GBPUSD trading in a 12% and 15% range respectively. Events of the last few months including that of Covid-19, Brexit, and the US elections have increased volatility and uncertainty for businesses trading internationally. With further risk still on the horizon, it is as important as ever for companies to ensure they are setup to minimise the bottom-line impact of adverse currency movement.

At the low point of the market in 2020 the cost of $50,000 worth of goods from overseas would have been over £43,000. At the high point the same transaction would have cost just £37,250. That near £6,000 difference is hugely challenging for businesses, but is also something that can be managed through a good FX hedging and risk management strategy including:

  • Spot payments – buy and pay now using the current foreign exchange rate. Spot payments allow you to take advantage of the market as it moves.
  • Forward contracts – those seeking greater visibility of their future costs may opt to use a forward contract. Forward contracts allow you to secure an exchange rate for a defined period of time in the future, helping with cash-flow planning and potentially mitigating currency risk.
  • Limit orders – targets and budgets. Limit orders allow you to place an order in the market for execution when that rate is realised. This can be used to protect a budget rate and/or to target a desired rate.

International expansion will be digital first for many companies in the future. To enable international growth, and to support businesses in taking their business abroad, a broader range of services than just payments and collection is required, and it’s important that smaller businesses are aware of the options open to them.

The above products, combined with a strong account management service can add huge bottom line value and allow you to get on what is most important, serving your customers and growing your business.

Find out more

FSB Trade Advisory Hub

Just starting out with international trade or looking to expand into new markets? Our Trade Advisory Hub is home to resources and expert guidance to help your small business operate in global markets.

Visit the hub