Opening an account with a bank overseas

A common alternative to opening a foreign currency account operated by a UK bank is to open a bank account in the country with which you're trading.

This option suits businesses that make or receive lots of payments - especially small payments - in a foreign currency.

Advantages

Because your money will be held in the local currency you can wait for the exchange rate to become more favourable before converting it - as long as you don't need the funds immediately.

A bank in the country with which you're trading will also be fully conversant with the rules and regulations regarding transactions in that country, and your customers might prefer to deal with a bank in their own country and in their own language.

Disadvantages

You may experience communication difficulties that can't be remedied face to face - which wouldn't be the case with a foreign currency account in the UK.

 Depending on the country in question, there may be complex rules governing who is entitled to open and operate a bank account.

 Procedures to stop money laundering may mean that setting up such an account is a long-winded process requiring many stages of legal and administrative clearance.

Overseas banks may not offer the same level of redress and protection as UK banks.