MBA1142 Saving Money When Paying in Different Currencies + Free Ride Friday!

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And once you leave us a review, you enter the draw every week until you win. It's our way to say thanks for showing us love on itunes. All right, let's jump into today's episode. Hey. Oh. Welcome to the $100 MBA show, the business podcast that makes dollars and cents every day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the $100 MBA, a complete business training and community online. And in today's episode you will learn how to save money. When you're paying in different currencies. Exchange rates can cost you some serious cash if you have to pay somebody in a different currency than the currency of your bank account, you could be losing hundreds, maybe even thousands of dollars every single month on just exchange rates. I know this firsthand. Running a remote team with our company. We pay 25 to 30 people every single month. And not everybody's getting paid in the same currency. So what are some solutions? How can you make sure that you're not losing serious cash, but at the same time paying your team and paying your contractors the way they need to be paid? That's what we get into in today's episode. So let's get into it. Let's get down to business for today's episode. To illustrate how to save money when you're paying in different currencies, we're going to say that our business is established in Europe. Let's, let's say France, for example. I have a French company, it's registered in France, and my business bank account is in Euros. That means the money that fuels my business is in the currency of Euros. Now what gets into that bank account is basically what I charge for my products and services. Now I might charge US dollars and that's totally fine, and then my bank will convert those US Dollars into Euros and deposit it in my account. But let's say I have to pay different employees, different contractors, different amounts of money in different currencies. Let's say I pay people in US Dollars as well as Australian dollars, but I also pay people in euros. Somehow I'm going to have to take the money that's in my euro account, my euro bank account, exchange it into US Dollars and pay that person in US dollars. Or in the other example with Australian dollars, same thing. Exchange my euros to Australian dollars and send that money. Obviously this happens automatically when I transfer the money. But if I, for example, use PayPal, PayPal is going to charge me some serious fees as well as give me one of the worst exchan man. Most people don't know this, but you lose more money on the exchange rate than the fees. A whole lot more. One of the best ways to kind of know this is take a look. The next time you try to transfer money using PayPal or even a bank transfer, take a look at the exchange rate they're exchanging your money and then Compare it to xe.com or Google Exchange rate. You're going to see a huge discrepancy. Let's say, for example, you're paying somebody's salary of $9,000 a month. You might be losing 7 to $800 just on the exchange rate every single month. I'm not talking about just because you're exchanging the money. I'm talking about the difference between a decent exchange rate and a poor one from the actual bank or payment processor or PayPal in this example. So what are your options? How can you save some money? Well, first of all, we have to establish the fact that, hey, every time you exchange money, it's going to cost you money, even when you're depositing cash. So for example, if again, you're charging for your products and services in US Dollars and then you're putting that money into or euro bank account, the bank will exchange that into Euros, you're going to lose on that exchange rate. And then every time you pay somebody out, you do a bank transfer with euros to US Dollars again, again, you're losing every time you exchange. So ideally it's best for you never to change the money if you can. So in your local bank. So in my example in France, I have to ask my bank, hey, can you open up a US dollar bank bank account? Most bank this is totally doable. They can open up in any currency. Now why is this important? Because, hey, I can just deposit dollars to dollars straight into that account and don't lose anything on the exchange. And then anytime I need to send money in dollars, I can use that account and again, never exchange the money. Now this is a great, great concept if you're only going to be using a second different currency, so like Euros and US Dollars. But what if you have a third currency involved or fourth or fifth like the Australian dollar or, or the yen or whatever it is. This is where you're going to have to think of other solutions. But having a second currency bank account in your local bank for your business, this is great because anytime you have any deposits with that currency, you can deposit straight into that bank account and never exchange. Now what if you have to because you have other currencies? Well, you can use services that have better exchange rates. One that comes to mind is Transferwise. Transferwise is not a sponsor or anything like that, but we use Transferwise because their exchange rates are better than most bank exchange rates as well as PayPal. They still charge a fee and hey, their exchange rate is still not super, super competitive, but it's better than the rest. And it's also super convenient to use Transferwise. Their interface and their whole procedure is a whole lot easier than PayPal, especially for payroll. You also can save some money by paying people less frequently. This is totally fine. If you say this upfront, if people know they're signing up for this when they join your team. So, so, for example, we pay our team members once a month and this is totally fine with them because they know, hey, this is what they signed up for. And hey, it's the same amount of money, but it's just less frequent. This saves us so much money on exchange rates and transfer fees versus paying every two weeks or even every week as some people do. Another thing when it comes to salaries that you can do is pay people in your local currency. So if you run a French company and your bank account is euros, then all your contracts can be set up in euros. Hey, and people could do the math themselves and, you know, see how much that would be in their local currency. Local currency in terms of their salary. But this saves you a whole lot of money because, hey, you're sending euros and then they, you know, take the exchange on the other side. Now this is totally fine if you run your company with a currency that's quite stable, whether it's euro, the US Dollar, the yen, even the British pound. Of course, with Brexit and everything, it's still rather stable. But if you're running a business in Egypt, for example, the Egyptian pound has done some serious acrobatics when it comes to their currency up and down super volat. So this is not something that's going to be comforting to your employees. So you're not going to have that option. Now, remember when I talked about charging in a different currency than your local currency? Well, you can offer several currencies in terms of checkout. This is going to take a bit of technical engineering on your website, but it's totally doable. Let me tell you what I'm talking about. Well, you can offer several currencies on checkout. Say, for example, you're going to offer US Dollar, Canadian dollar, Australian dollar and Euro. Four different options. When they select that actual currency, they check out and they get charged in that currency. You can have your system hook up with four different stripe accounts or payment processor accounts that dump that money into a separate bank account. So everybody who checks out with US Dollar gets charged from a different stripe account or premium processor account and that charge gets dumped into a bank account. That's US Dollar. Same thing with Canadian dollar, same thing with Australian dollar. You get the point. So essentially you'll have four different currency bank accounts in your business bank account. And that way you'll have a variety of currencies that are in your business's deposits or profits. And Then when it's time for you to pay your team, your employees, you can use each account accordingly. No exchange rates, nothing. You're using the same currency you earned with. Now obviously you don't have to do this for, you know, 50 different currencies. You can do it only for the currencies you pay in. So if you have employees in Europe, in Japan, in the US you only need three currencies. So only need to offer three different currencies. Most sites only offer one currency. So by offering three different currencies, that's pretty cool. Now this is a little bit more complex. It's going to require you to have three different bank accounts and three different payment processors. But it's kind of one of those things that you work on, you build, and you do it once and you reap the benefits for as long as the business is around. Now you need to definitely keep your account in the loop because these are different currencies going on here. You can, you need to speak to your accountant about this before you do it. And you need to be able to track how much money you're making, your revenue. So come tax time, they know how much taxes to tax you on because you're going to be taxed for the country that your business is registered for and all these currencies will need to be converted to your local currency. At some point your account will be able to tell you how to do this as well as when's the best time to consider this so you can get the best exchange rate for this reason. Not a simple solution, but it's something that you can consider if you're putting a lot of money out there. If you're paying a lot of people in different currencies on a regular basis.

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Okay, does this happen to anybody else? You sit down with a juicy QPC, some McNuggets, and those golden fries from McDonald's. Then you take a long sip of your Sprite because you can still hear your mama saying, don't fill up on that drink before you eat your food. But you're grown now. So you do what you want.

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To wrap up today's episode, I really encourage you to sit down with your accountant and talk about this issue. How can you save money in different ways? They may have better ideas depending on where you're located, in what country, what currency you're dealing with. I can only share what has worked with us, some options that we explored. When it comes to money and saving money and money coming in and money coming out, you need to make sure your accountant is involved because hey, you want to make sure everything's on the up and up when it comes to your business taxes. Also, your accountant's not only there to make sure you're doing the right thing, but also to advise you how to be the most efficient business possible when it comes to your finances. An hour sit down with your accountant can make a world of a difference when it comes to this topic. Thank you so much for listening to today's episode. I hope it helped. But today's episode is not over. It's Free Ride Friday. I got to give away a lifetime membership to ezcourse. Let's see who won this week's Free Ride. And the winner is. Vzjw KDK ej. Seriously? That's the handle. Looks like some random letters, but hey, it could mean something. You are a winner all the way from Sweden. By the way, this reviewer says OMAR is awesome. 5 stars. Love the show, perfect format, great tips. Well, thank you for that great review. And your mission is to email me@omar mba net so I can hook you up with the lifetime membership of Easy Course. Hey, if you want to win, just leave us an iTunes rating interview. Listen in on Friday to see if you won the random draw. Thank you so much for listening. Before I go, I want to leave you with this. The fastest, simple solution to saving money on currency exchanges is to pay people the currency that you're earning the money in, or the bank account your business is operating under. So if you're running your business on US dollars, then you should make all your salaries in US dollars and then everybody can exchange based on their own currency. But if you live in a country that maybe you don't have a prominent currency like the US dollar or the euro or whatever, it's okay. You can choose one of these currencies, charge your customers in that currency, pay your employees and your team in that currency and even pay yourself in that currency. And then your local bank will exchange and deposit into your personal bank account in your local currency. All right. Have a wonderful weekend and I'll check you on Monday's episode. I'll see you then. Take care. Of.

Dear McDonald's, your breakfast menu. Fire tens across the board. I could be happy with anything even though I ordered the same thing every time. Thanks for not judging me. I'll try something new next time.

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