If you trade with foreign partners, you need a company’s foreign currency account. Regardless of whether you are an exporter or importer, with your contractors you certainly do not settle in zlotys, but in euros, dollars or in another currency.
Suppose you get payment for your goods in euros. This money will be converted at the bank exchange rate. Then you pay your subcontractors or order raw materials for production – also abroad. Again, your local currency has to be converted into Euro. And that means that you pay the spread for the second time, the difference between the buy and sell rates. And if in the meantime the euro exchange rate changes to your disadvantage, you lose for the third time. You lose, but you do not have to. The solution is a foreign currency account. You need to think about it if you want to make international businesses.
A currency account is simply an ordinary bank account you use in your company, but you store foreign currency on it instead of your local one. Such an account can be maintained in dollars, euros, British pounds, Swiss francs and many other currencies – the offer width depends on the bank selected. By using a currency account, you can of course not only store money on it, but also receive payments from abroad or make transfers.
The bank may issue a payment card to the foreign currency account – this is another reason why you should set up a foreign currency account. Suppose you use an account maintained in your local currency. When you pay with a card issued to this account abroad, your bank will automatically convert your payment. The cost is smaller if you pay in euros – then the bank will only convert once, from the euro to the local currency. However, if you pay in a different, less popular currency, for example in Czech crowns, then the payment in crowns will first be converted into euros, and then into the currency you use, and that means and that means double the cost of currency conversion.
Almost every bank offers currency accounts in various currencies. There are several issues that you should be aware of to choose the best for yourself. The first selection is the choice of the currency in which your account will be kept – dollars, euros, swiss francs and British pounds – these are the most popular but banks offer also other currencies. The second important matter is the size of the spread – the difference between the buying rate and the sale rate of the currency, in other words, spread is the profit of a bank after selling its currency to us – of course, the lower the spread, the better for the customer. Another issue is to check whether the bank requires a minimum monthly income on the account, because it may generate additional costs. The fees for opening and maintaining an account by some banks are collected, it may also be that the bank charges a fee for opening an account, but the account is free or vice versa, it is worth calculating whether it is more profitable to pay once at the beginning than to regularly pay even small amounts, but for many months or years.ย
You also need to read carefully the paragraph about the fees for issuing and using a payment card – it is a regular debit card, it is worth comparing the monthly or annual costs of using it and the fees for withdrawals from ATMs at home and abroad. Anotherย important thing are costs of deposits and cash withdrawals at bank branches – it is worth checking whether the bank branch we use is providing cash services in the currency we are interested in. You should also ask the bank representative about the costs of foreign transfers – if the transfer is in the same currency as the account maintained, the bank will not charge any fees for conversion, but may charge a fee for the transfer itself.
Rememeber that there are some possibilities to negotiate the conditions, rates and fees with the bank. Sometimes they offer promotional packages for new clients that they would like to cooperate with.
