Opening foreign currency accounts

Although the UK isn't in the eurozone, you can open a euro account here - which could be useful if you conduct a lot of business with European customers. Accounts in other foreign currencies are also available.

Foreign currency accounts can be a good option for importers and exporters as they allow you to 'net' receivables and payables in the same currency. These accounts allow the receipt of inward payments, cheques/cash and also allow the issue of international money transfers and drafts. They are offered by most of the UK clearing banks including Barclays, Co-operative Bank, HSBC, Lloyds TSB, NatWest and the Royal Bank of Scotland.

f you open an account in the currency in which you make the bulk of your transactions you can hedge against exchange rate changes by keeping money in the account until the rate is beneficial to you.

This solution suits businesses with:

 a large number of dealings in a particular currency

 a strong cashflow - which means they're unlikely to require immediate access to funds

a need to hold currency for future payments

Advantages

Ease of access.

 Potential interest earned on your deposits.

 The ability to discuss transactions in English with your own bank.

 Avoiding the unnecessary cost of exchanging currency.

Disadvantages

There may be charges for setting up and running the account. You should check the charges carefully.

If you need to convert funds in your foreign currency account into sterling for UK use, for example in order to ease cashflow, you will face a loss if the pound is strong against that currency.

 You may also have to wait a long time for the exchange rate to move in your favour - and it may never do so.