A Guide on Payments in Multiple Currencies
Because modern technology has made it easier to bridge the gap between businesses and their customers, companies are now expanding their operations to the online world with ease. Social media and other digital platforms have made it easier to reach out to more people online, so it should come as no surprise that it has now become easier for companies to service customers internationally.
Whether you’ve been thinking about expanding the reach of your business or you’ve picked up a foreign supplier who can cater to your customers in other countries, you can’t deny that digital media and modern technology have played or will play a big part in your future plans. However, you may eventually find yourself asking one question: how are you going to deal with foreign currencies?
Although even more growth lies ahead in the international market, the foreign exchange aspect may pose a problem, especially when you don’t consider all the factors. By going international, you’ll have to deal with accounting involving foreign currencies, fluctuating values, and exchange rates.
Why you shouldn’t worry about foreign currencies
However, with the right knowledge and attention to detail, you won’t have to worry about dealing with foreign currencies as soon as your business goes international, especially when you have this guide. But before anything else, we have to see why you’ll have to deal with them in the first place:
You will have to deal with foreign currency when running a business online because there isn’t a central currency to maintain value between branches and countries. Bitcoin doesn’t count, either.
Customers are not after a website that doesn’t make things convenient for them, which means you’ll have to take the foreign cash or leave it.
When selling online you may also have suppliers in other countries as you grow.
Without the proper care and guidance, you can expect to have accounting mistakes, possible losses, and complex tax implications, and end up more frustrated than ever, but you can easily avoid all that by paying close attention to all the details and using the right tools.
How to survive doing business internationally
Do you want to know what you need to do to ensure that you’ll be able to make a fortune online through international transactions? Here are a few currency accounting fundamentals that you’ll have to take note of:
1. Choose the best method of payment for your company
You’ll have to figure out how customers can pay for their orders while ensuring that no problems come along in the guise of fees and other things. Additionally paying Vendors in other currencies presents the same issue. By choosing the best method of payment for your international business, you should do your due diligence but keep in mind something that connects to your current bank AND your accounting system solves a lot of issues. Take note of the availability of multiple currencies on the platform, extra charges that might be incurred during the process of payment, and the speed of transactions. Veem solves the issues I’ve mentioned
2. Using Veem on top of your existing bank account
Veem will allow you to make payments in a timely manner without needing an additional foreign bank account. You can connect Veem to your accounting system (QuickBooks & Xero are both compatible) and use it to issue payments to Vendors. Additionally, Vendors can use the Veem Wallet to accept payments in USD and avoid exchange fees from their bank. They can also pay their Vendors using Veem Wallet. All of this can be done while avoiding your bank’s wire fees.
3. Closing the Month
Now that you’ve set up a payments system that can work with your accounting system you will need to decide if you want to have multi-currency turned on or if you’d prefer to only use USD on your books. Once this is decided you’ll need to make sure that your payment amounts are being recorded correctly. You can make absolutely sure of this during your month-end reconciliation. When reconciling you will know immediately if your payments have been recorded with the correct exchange rate as they should match your bank statements. Again, Veem makes this super simple.
As you can probably tell, I’m a big fan of Veem. Using Veem for the past 6 years has saved my business time and money as well as my clients. Please reach out if you have any questions about Veem or bookkeeping.
At Totally Booked, we provide simplified financial management services to help you as you grow your business. We are your go-to company when it comes to small business bookkeeping services in NY, such as accounts payable and receivables, budgeting, payroll, app connections, sales tax, custom reports, bank reconciliations, and much more. Contact us today!