International Treasury: Managing Cash Across Borders

A $20M company with international operations faces many of the same treasury challenges as a Fortune 500—just at smaller scale. Currency volatility can swing your margins. Cash can get trapped overseas. International payments can be slow and expensive.

The good news: modern fintech and banking options make international treasury more accessible than ever. You don't need a team of treasury specialists to manage FX and cross-border payments effectively.

When International Treasury Matters

International treasury considerations become relevant when you have:

• Foreign currency revenues: Customers pay you in EUR, GBP, or other currencies
• Foreign currency expenses: You pay suppliers, contractors, or employees in foreign currencies
• Foreign subsidiaries: Legal entities in other countries with local bank accounts
• International expansion plans: Preparing to enter new markets

If all your revenue and expenses are in USD and you have no foreign entities, international treasury isn't your concern—yet.

Multi-Currency Accounts

Holding accounts in multiple currencies gives you flexibility and can reduce FX costs.

Why Hold Foreign Currency

• Natural hedge: Receive EUR revenue, pay EUR expenses—no FX conversion needed
• Timing flexibility: Convert when rates are favorable rather than at payment time
• Local payment efficiency: Pay from local currency account for better rates and speed
• Customer convenience: Invoice in customer's currency

Account Options

• US bank with multi-currency: Major US banks offer foreign currency accounts (higher minimums)
• International banks: HSBC, Citi—better international network
• Fintech multi-currency: Wise, Airwallex, Mercury—lower cost, easier setup
• Local accounts: Bank account in each country (most complex but sometimes necessary)

Which Currencies to Hold

Only maintain accounts in currencies where you have meaningful, recurring flows:

• Material volume: At least $50K-$100K annual flows in that currency
• Recurring nature: Regular inflows or outflows, not one-time
• Natural hedge potential: Both revenues and expenses in same currency

FX Exposure Management

When you have foreign currency revenues or expenses, currency movements affect your profitability.

Types of FX Exposure

• Transaction exposure: FX impact on specific transactions (receivables, payables)
• Translation exposure: FX impact on consolidating foreign subsidiaries
• Economic exposure: FX impact on competitive position and long-term cash flows

Managing Transaction Exposure

For most growing companies, focus on transaction exposure:

• Natural hedging: Match foreign currency revenues with foreign currency expenses
• Invoice in USD: Where customers will accept it, eliminate your exposure
• Accelerate conversion: Convert foreign currency receipts quickly if you expect depreciation
• Forward contracts: Lock in exchange rates for known future transactions

When to Use Hedging

Cross-Border Payments

International payments can be slow, expensive, and opaque. Choosing the right method saves money and time.

Payment Methods

• International wire: Traditional method; reliable but expensive ($25-$50 per wire plus FX spread)
• SWIFT gpi: Enhanced wire tracking; faster, more transparent
• Fintech rails: Wise, Payoneer, Airwallex; cheaper, faster for many corridors
• Local payment methods: SEPA in Europe, BACS in UK; cheapest for local payments

Cost Comparison

Choosing a Method

• Large, urgent payments: Bank wire for reliability and immediate availability
• Regular vendor payments: Fintech for cost savings; schedule in advance
• Payroll: Specialized international payroll provider (Deel, Remote)
• Contractor payments: Fintech or Payoneer; contractors often have preferences

Repatriation Strategies

Cash in foreign subsidiaries may need to return to the parent company. How you do this has tax and operational implications.

Repatriation Methods

• Dividends: Subsidiary pays dividend to parent; may have withholding tax
• Intercompany loans: Subsidiary lends to parent; must be properly documented
• Service fees: Parent charges subsidiary for management services; must be arm's length
• Royalties: If IP is involved; subject to transfer pricing rules

Tax Considerations

• Withholding tax: Many countries withhold tax on dividends, interest, royalties
• Tax treaties: US has treaties with many countries reducing withholding rates
• Transfer pricing: Intercompany charges must be at arm's-length rates
• Permanent establishment: Be careful about creating tax nexus through payments

Practical Approach

• Keep foreign cash if it will be used locally (avoids two-way conversion costs)
• Repatriate when parent needs liquidity or foreign cash is excessive
• Work with tax advisors on optimal structure
• Plan repatriation annually, not ad-hoc

Regulatory Considerations

International treasury involves regulatory requirements that vary by country and transaction type.

Key Regulations

• OFAC sanctions: US restrictions on transactions with sanctioned countries/persons
• Anti-money laundering (AML): Know-your-customer requirements, suspicious activity reporting
• FBAR reporting: US persons must report foreign accounts over $10,000
• Capital controls: Some countries restrict currency movements

By Country Considerations

• UK/EU: Generally straightforward; SEPA makes EUR payments easy
• Canada: Similar to US; minimal friction
• China: Capital controls, registration requirements, challenging for small companies
• India: Complex regulations, recommend working with local bank
• Latin America: Varies widely; some countries have currency controls

International Treasury Technology

Technology can simplify international treasury management significantly.

Multi-Currency Fintech Platforms

• Wise Business: Multi-currency accounts, cheap transfers, good for most growing companies
• Airwallex: More sophisticated; good for higher volumes
• Mercury: US banking with multi-currency capabilities
• Payoneer: Good for receiving payments from marketplaces, international AR

FX Management Tools

• Rate alerts: Get notified when rates hit your target
• Auto-conversion: Convert automatically at specified rates
• Forward contracts: Lock in rates for future transactions

Accounting Integration

• Ensure your multi-currency accounts integrate with accounting software
• Track realized vs. unrealized FX gains/losses
• Maintain clear audit trail for all international transactions

Building International Treasury Capability

Stage 1: Starting International

When you first have international transactions:

• Open a multi-currency fintech account (Wise, Mercury)
• Invoice in USD where customers accept it
• Convert foreign currency receipts promptly
• Use fintech for international payments

Stage 2: Growing International

When international becomes significant (20%+ of revenue):

• Consider holding balances in major foreign currencies
• Implement natural hedging where possible
• Evaluate forward contracts for large committed transactions
• Establish banking relationship with international capability

Stage 3: Mature International

With foreign subsidiaries and complex operations:

• Formal FX policy and hedging program
• Centralized treasury with visibility across all entities
• Local banking relationships in key markets
• Defined repatriation strategy