Cross-currency Billing When Freelancing for International Clients

As a freelancer you’ll often find yourself working with clients in many different countries from your own. One day you might be providing services to a business in your hometown, the next, working with a company on the opposite side the world. All from your home office or shared studio.

Payment can become a headache when working with clients in multiple foreign countries. However, cross-currency billing when freelancing for international clients needn’t be a hassle. There are some simple ways to take the stress and confusion out of multi-currency invoicing.

What is cross-currency billing?

Cross-country billing is where two different currencies are involved in the invoicing process – the freelancer’s and the client’s. For example, a European-based freelancer might invoice in euros, while the US-based client will prefer to pay in dollars.

Options for cross-currency billing

Some invoicing software options allow you to invoice in your own currency and let your clients pay in theirs. Basically the invoicing service handles it all for you, so you don’t have to worry about making sure everyone’s on the same page about how much is owed. One or two clicks of the mouse and it’s all automatically calculated and paid.

Some options include:

  • Billing in a single currency and requiring payments solely in that currency. This would be like you billing all your clients in USD, and a British client having to deal with a USD payment through their bank, or letting their credit card deal with the currency conversion (generally charging them a fee).
  • Billing clients in their own currency and letting your invoicing solution or bank handle the currency conversions. This is easier for international clients, but you’ll likely be the one charged for those currency conversions.

Cross-currency billing considerations

Conversion rates change frequently, so that can lead to inconsistent pricing for long-term or recurring contracts. If one currency crashes, your work might suddenly be more expensive for certain clients for example, which could lead to them looking for less costly replacements.

There will likely be currency conversion fees involved if you bill in anything other than your standard currency. So as a freelancer you should think about your average contract value and what those fees could amount to. Then you’ll need to decide a number of things including:

  1. If it’s worth offering the convenience of cross-currency billing;
  2. If you should charge more to account for those fees if you frequently work with international clients;
  3. If you’ll always invoice in your own currency for consistency’s sake, and let clients pay currency conversion fees through their PayPal account, credit card, or bank when they make the payment in your currency.

If, as a freelancer, you advertise rates in multiple currencies (such as USD & GBP if based in the UK), you’ll need to either automate that process or keep a close eye on currency conversion rates to make sure you don’t take a big pay cut as exchange rates fluctuate.

There are a couple more things you should do before finalising fees with a new or existing client.

Always check the exchange rates and how they have fluctuated over a set period of time. This will help you decide how much to charge for a particular service while not losing money to unfavourable exchange rates.

Whenever possible, bill for a little extra to cover the exchange rate losses, especially for small batch or one-off projects. Also think about billing a client less often and for a larger total (see also: Batch Billing Vs Invoicing Daily). This can affect per-transaction fees, which some payment processors charge in addition to percentage-based fee. So instead of billing once a week, send an invoice monthly instead.

Is Cross-currency Invoicing Right for You?

If you’re a freelancer or solo-entrepreneur, with a diverse range of clients in many different countries, then cross-currency invoicing will be an important part of your business. The only way to avoid cross-currency billing is by working solely for clients in your own country or monetary union, like the EU.

However, this can be restrictive to the growth of your career, especially in this age when internet-based international services are the norm. New freelancers might imagine working solely with clients in their city or state, but usually find clients find them from much further afield.

Whether you bill international clients in your own currency or their currency depends largely on which you personally prefer. Billing a Japanese firm in the Yen currency if you’re an American freelancer will potentially make the experience of working with you easier for that company but a little more of a headache for you.

Then again, the USD is the international currency and is the default currency for many business transactions between two non-American nations. The Japanese firm in the example above may be perfectly accustomed to being billed in the Dollar.

The same cannot be said of less well-known currencies. If you’re a freelancer from Switzerland operating with the Swiss Franc, then billing in the USD is probably going to be much easier for everyone involved.

Ultimately, the decision might come down to what currency your client wants to be billed in, then making the relevant adjustments to meet their requirements.