Why to have a bank account for each currency you do trade in?

If you have a Hungarian company, you probably have at least two or three bank accounts. But why exactly do you need them?

Company bank accounts defined by currency

The most important feature of a bank account is its currency. Nothing is simpler than receiving EUR payment to your EUR account, or paying a HUF tax from a HUF account. This makes keeping tabs on what is happening around your company really easy.

Keeping your company transparent is essential for keeping it compliant with Hungarian regulations. This makes maintaining even three bank accounts for three different currencies cost-effective.

Transactions in mixed currencies

Of course, you can make transactions between accounts with different currencies as well. However, in this case money must be exchanged from one currency to the other. This in turn has its own complications.

If the bank has to exchange your money, the exchange rate it uses has to cover this extra work and might not be favorable to you. If you make few transactions with mixed currencies, a slight loss might be acceptable. However, if you keep making such transactions (especially of big sums), your losses will accumulate. The more mixed currency exchanges you make, the higher the proportion of your losses will be.

Extra work for everyone

Transactions in mixed currencies generate extra work not only for your bank, but also for your accountant. They will have to take note of not only the transaction itself, but also the exchange rates and the relevant losses (or gains). If there are too many such transactions, you risk losing the transparency of your company, which is essential for remaining compliant with regulations.

What to do?

• Maintain as many company bank accounts as many currencies you trade in.
• Make sure to pay your invoices from the company bank account with the right currency.
• Make sure to indicate the right bank account in each invoice you issue.

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