Multi-Currency Banking: The Hidden Profit Leak in Your Agency

Hey there, Welcome back to Agency Finance Letters. This one will be a 5 min read.

We recently started with an agency who was losing thousands annually to something completely avoidable: currency conversion fees. Let's break down this hidden profit leak and how to fix it.

The Currency Conversion Tax 
Most agencies don't realize they're paying a premium on every international transaction:

• Stripe charges an additional 2% for currency conversion

• Credit cards typically add 2-3% foreign transaction fees

• PayPal's conversion rates can include a 4% markup

• Bank wire transfers often hide 1-4% in the exchange rate

For agencies doing $50K+ monthly with international clients, this silently erodes 2-4% of your total revenue.

The Real Cost Calculation 
Let's look at a typical scenario:

• Agency earns $30K monthly from UK clients (in GBP)

• They process payments through Stripe to a USD account

• Stripe takes 2% for currency conversion ($600)

• When paying UK-based contractors, they typically convert a portion of USD back to GBP (around +1-1.5% conversion fee)

• Annual loss estimate: $5-7K in conversion fees.

The Multi-Currency Solution 
Setting up multi-currency banking is surprisingly straightforward:

1. Open accounts in currencies you regularly use (USD, EUR, GBP, etc.)

   • Platforms like Wise or Revolut have this easily available

2. Update payment processors to settle in native currencies

3. Pay expenses in the same currency when possible

4. Convert currencies only when necessary, in bulk

Platform Options Compared 
We've tested multiple solutions with our clients:

• Wise (formerly TransferWise): Best overall rates, transparent fees

• Revolut Business: Great for multiple currencies and physical cards

• Traditional banks: Typically highest fees, avoid when possible

Implementation Checklist

1. Audit your current international cash flow

2. Identify recurring payment sources by currency

3. Open appropriate currency accounts

4. Update payment processors and invoicing

5. Revise contractor payment methods

6. Set quarterly currency conversion strategy

Remember: Every dollar saved on fees is a dollar of pure profit.

Want help setting up your multi-currency strategy? Just hit reply.

Till next week,

Joey