Modern Multi-Currency Tools for Small Business in Singapore

Multi-Currency in Business Operations

Why would you need to use foreign currencies and what are some of the issues you need to consider?

1. ‍More Options for More Customers: Offering ways for customers to pay in their preferred currency can help you get paid faster.‍
2. Reduced Currency Exchange Fees: By holding and receiving payments in multiple currencies, businesses can reduce the costs associated with currency conversion. ‍
3. Improved Cash Flow Management: Paying suppliers in a foreign currency may be quicker and easier when you already have that same currency in a foreign currency bank account without worrying about the day to day fluctuations in conversion rate.‍
4. Compliance and Simplification: In Singapore, GST registered businesses issuing foreign currency invoices must show conversions in SGD to comply with the Inland Revenue Authority of Singapore (IRAS) requirements. Having an accounting system that automates these conversions can save time and reduce errors.

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Choosing Your Base or Functional Currency

Another decision you'll need to make as a business owner or manager for compliance is to determine your base currency.

The base currency should reflect the primary economic environment in which your business operates. For most Singaporean businesses, this will be the Singapore Dollar (SGD), but for those with significant operations abroad, another currency might be more appropriate.

This decision impacts how you report your finances and should align with FRS 21, the Financial Reporting Standard on Functional Currency.

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Leveraging Xero for Multi-Currency Accounting

Xero supports transactions in over 160 currencies, updating exchange rates hourly from XE.com. This feature not only helps in invoicing and billing in multiple currencies but also provides detailed reports showing the impact of currency movements on your business finances. Key features include:

• Ability to issue foreign currency tax invoices that are compliant with IRAS rules.
• Automatic tracking of gains and losses due to currency fluctuations.
• Real-time visibility of foreign currency gains and losses.
• Seamless integration with tools like Airwallex to further streamline currency management.

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Airwallex: A single account to manage your global payments and finances

Airwallex is designed to simplify the process of managing global currencies. It's easy to get set up - there's no bank queues or paperwork - it's easy to apply online in a few minutes.

By opening an Airwallex Global Account, businesses can:

• Receive and hold payments in multiple currencies, avoiding conversion fees.
• Make international transfers quickly and at interbank FX rates.
• Integrate seamlessly with Xero for simplified bookkeeping and automatic reconciliation.
• Automate domestic and international bill payments with Xero bills to pay integration.

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Conclusion

For small businesses in Singapore, operating in a multi-currency environment without the right tools can lead to headaches in operations and frustrations in reporting. Business owners need to be proactive in financial management.

Tools like Xero and services like Airwallex not only provide the necessary infrastructure to manage multiple currencies but also offer strategic advantages in terms of cost savings, compliance, and operational efficiency.

If you would like to make the move to Xero, we are a PSG pre-approved vendor and can help you save on Xero subscriptions, set up, migration, and training.

If you're thinking of opening an Airwallex account, we have a special offer! Sign up through Harvest Accounting's referral link for your first $20,000 of free foreign exchange transfers. That's $0 fees and 0% margin on your first SGD $20,000 in FX conversions.