How to invoice international clients and keep the exchange rate on your side
Knowing how to invoice international clients is mostly four decisions made before the invoice exists: which currency you bill in, who absorbs a moving exchange rate, whether VAT or GST is due where the client is, and how the money crosses the border. Settle those and the invoice itself becomes a checklist you can run in five minutes.
The checklist is the easy part. The decisions are where the money goes, because they do not look like decisions. Billing a New York client in dollars feels like courtesy. It is also a position on the exchange rate, held for thirty days, that nobody asked you to take.
What currency should you invoice international clients in?
There are three options, and each one hands the exchange rate risk to somebody.
| Invoice in | Who carries the exchange rate risk | Works best when |
|---|---|---|
| Your own currency | The client | Your costs are local, your margins are thin, or the payment window is long |
| The client’s currency | You | The client will not pay in anything else, or you already hold or spend that currency |
| A third major currency, usually USD or EUR | Both of you, against that currency | Your own currency is awkward for clients to pay in |
A workable default: invoice in your own currency unless you can name the reason not to. Good reasons exist. The client’s accounts system cannot pay in your currency. The client has a supplier policy you will not move. Your currency is one foreign banks handle badly. You already hold the client’s currency, because you spend it or have an account to park it in.
If none of those apply, invoicing in the client’s currency is a favour. Fine, but know you are doing it, and price it.
When does invoicing in USD make sense?
The dollar is the default for a lot of cross-border work, for good reasons. Almost any business client can pay it, it is easy to hold, and quoting in it removes a question from the sale.
The catch: a dollar invoice is worth a different amount in your currency every day until it is paid. If you invoice in USD, set the dollar rate from your home-currency target, not the other way round, and recheck it when the rate moves, not once a year.
Who carries the exchange rate risk?
Here is the whole problem in one invoice. The numbers are round on purpose, and the rates are assumptions, not today’s rates.
You are a developer in Lisbon. Your rent, tax and savings are in euros. A US client owes you for a month of work and you agree 5,000 USD on 30-day terms. Assume that on the invoice date 1 USD buys 0.90 EUR, so in your head the invoice is worth 4,500 EUR.
Now assume the dollar weakens 5% against the euro before the client pays. One dollar now buys 0.855 EUR. The client pays exactly what the invoice says, on the due date, and 5,000 USD arrives as 4,275 EUR. You are 225 EUR short of the number you planned around, and nobody did anything wrong.
Run it the other way. You invoice 4,500 EUR instead. The same movement means the client now needs about 5,263 USD to settle it. Your number did not move. Theirs did.
And the movement can go your way: if the dollar strengthens, the dollar invoice is worth more than you planned. Exchange rate risk is not a loss. It is variance, and the only question is who holds it.
Four ways to keep it small when you are the one holding it:
- Shorten the window. Thirty days of rate movement is more variance than fourteen. Asking for 14-day terms costs nothing.
- Price the buffer in, openly. If you quote in the client’s currency, do not convert your home rate to the cent. Round up to a figure that survives a normal month of movement.
- Put a review clause in any retainer. One sentence turns a silent loss into a scheduled conversation.
- Hold the currency and convert on your schedule. A multi-currency account keeps dollars as dollars until you choose to convert, not on whatever day they happen to land.
For the third, a clause you can adapt:
Fees are quoted in US dollars, based on an exchange rate of 1 USD = [rate] EUR published by [source] on [date]. If the published rate between the two currencies moves by more than 5% from that figure, either party may ask to review the fee for the following month.
Five per cent is a placeholder. Pick the threshold you could absorb for one month without resenting it.
What does an invoice to a foreign client need to include?
A domestic invoice can get away with being informal. A cross-border one is read by an accounts team in another country, possibly in their second language, against their own tax rules. Anything they need to pay without emailing you belongs on the page.
The European Commission’s VAT invoicing rules make the identity, numbering, date and tax items below mandatory on a full EU VAT invoice. Wherever you are, the whole list is a sensible floor.
Who is billing whom
- Your legal name as registered, plus your trading name if it differs, and your full address including the country.
- Your VAT, GST or other tax number, if you are registered.
- The client’s legal entity name. Accounts teams pay entities, not the person who hired you.
- The client’s full address and, for business clients in a VAT system, their VAT identification number.
What and when
- A unique invoice number from one unbroken sequence.
- The issue date, and the date or period the work was done if it differs.
- The work described in lines with quantities and rates, not one lump sum. Lines answer most client questions before they are asked, which matters more across eight time zones.
The money
- The currency as its three-letter code: USD, CAD, AUD, not ”$”. The US, Canadian, Australian and Singapore dollars all share that sign.
- The tax line: VAT or GST charged at a stated rate, or the reverse charge wording, or the note your accountant says exported services need.
- The due date as a calendar date. “Net 30” gets counted from receipt, from approval or from month end, depending on who is counting.
- The payment details, in one block (see below).
- Who pays the transfer charges.
- If you show a converted total: the rate, its source, its date, and which figure is payable.
Should you put the exchange rate on the invoice?
Only if you show a converted amount, and then always.
A converted figure without a rate is a number nobody can check. With a rate but no date, it is a number nobody can reproduce, because rates move daily. Stated properly, it helps: the client sees roughly what the invoice costs them, and nobody mistakes it for the amount due.
Name the source. A published reference rate, such as the European Central Bank’s daily euro reference rates, can be looked up by anyone later. The rate your banking app showed you last Tuesday cannot.
A note you can copy into the invoice:
Amount due: 5,000.00 USD. For reference only: [amount] EUR at 1 USD = [rate] EUR ([source], [date]). Payment is due in USD. The converted figure is not an amount payable.
The last two sentences do the work. Without them, a client who pays the converted figure in euros has paid what the invoice appeared to ask for, and you are the one chasing the difference.
The free invoice generator on this site does the arithmetic. Set the invoice currency and a second one, and it shows the converted total with the rate, its source and the date it was published for; a “Print on PDF” tick box decides whether that line reaches the invoice. Most rates are ECB reference rates. The Pakistani rupee, which the ECB does not publish, comes from a different source and is labelled as such. If live rates cannot load, the page says it is using offline rates. Add the “payable in” sentence in the notes field.
Do you charge VAT or GST to clients in another country?
Often not, but “often” is carrying real weight in that sentence. The answer depends on where you are registered, where the client is, whether the client is a business or a person, and what the service is.
This is not tax advice. Check your own situation with an accountant in your country before you rely on any of it. What follows is the high-level shape, with the official source for each point.
How does the EU reverse charge work for business clients?
For services between businesses, the EU’s default rule is that the service is taxed where the customer is established, not where you are. When that rule applies and you are not established in the customer’s EU country, the European Commission’s page on who is liable for VAT puts the liability on the customer, who accounts for the VAT itself. That is the reverse charge.
It changes the invoice in two ways. The client’s VAT identification number belongs on it, and the Commission’s invoicing rules call for the words “reverse charge” where the customer is liable for the tax. Leave either off and you are inviting a query from their accounts team.
Two limits. The reverse charge covers business customers: a private individual is not a business acting as such, so the wording does not belong on their invoice. And the Commission calls the customer-location rule the default, which means some services fall outside it. Whether yours does is a question for the accountant.
What are the UK rules for services to overseas clients?
The UK works on the same principle. HMRC’s place of supply of services guidance (VAT Notice 741A) sets the business-to-business general rule: the supply is made where the customer belongs. If that place is outside the UK, the supply is “outside the scope” of UK VAT. A UK-registered freelancer billing a business in Germany or the US under the general rule does not add UK VAT.
In the other direction, the same notice says that where a UK business buys services from a supplier outside the UK and the place of supply is the UK, the UK customer accounts for the VAT under the reverse charge. For private customers the general rule flips: the supply is made where the supplier belongs.
What about exporting services from India?
India sets conditions before a service counts as an export at all. Under section 2(6) of the IGST Act, the supplier must be in India, the recipient and the place of supply must be outside India, and payment must be received in convertible foreign exchange, or in Indian rupees wherever the Reserve Bank of India permits. A fifth condition covers related establishments. So how the money arrives decides, in part, whether the work qualifies.
A registered supplier who wants to export services without paying integrated tax files a Letter of Undertaking in Form GST RFD-11 before the supply. The GST portal’s guide to furnishing an LUT notes that an LUT is filed for a financial year and expires at the end of it, so it is an annual task, not a one-off.
How do international clients pay you?
Two routes cover almost all of it: a bank transfer or a payment platform. Both work. What differs is how much arrives, when, and how much of the conversion you can see.
International bank transfer
Give the client everything their bank will ask for, in one block: the account holder name exactly as your bank holds it, the bank’s name and address, the account number or IBAN, the SWIFT/BIC code, and anything else your bank lists for incoming international payments. A mismatched name or a wrong character can get a payment delayed or returned, slowly.
Agree who pays the charges. A wire instruction carries a charges option, commonly OUR (the sender pays all charges), SHA (the charges are shared) or BEN (the recipient pays). Intermediary banks can deduct their own charges along the way, so 5,000 USD sent is not always 5,000 USD received. Put your expectation on the invoice, for example “All bank charges to be paid by the sender”, and compare the amount received with the amount invoiced before you mark it paid.
Watch the conversion. A foreign-currency payment landing in a home-currency account gets converted at a rate your bank sets, on the day it arrives. That is not necessarily the reference rate you quoted, and the gap is a cost even when no fee line appears.
Payment platforms and multi-currency accounts
Payment platforms let a client pay by card, payment link or local transfer, and many give you local account details in the client’s currency, so the client makes a domestic payment. For exchange rate risk, the feature that matters is holding: keeping the currency as it arrived and converting when you choose.
Before you pick one, read its own pricing page for three things: what receiving costs, what converting costs, and whether it pays out to your country. Availability varies, and finding out after the client has paid is the expensive way.
Whichever route you use, put one payment method on the invoice, two at most. A menu of five is five chances for the client’s accounts team to pick the one you check least.
What should you do before the next international invoice goes out?
Six things, most of which you only do once:
- Choose the currency and write down why. No nameable reason to bill in theirs means you bill in yours.
- Collect the client’s legal entity name, address and tax ID when the work is agreed, not when the invoice is due.
- Ask your accountant one question: do I charge tax on this service to this client, and what wording goes on the invoice?
- Set terms as a calendar date, and ask for 14 days.
- Decide whether you show a converted total. If you do, print the rate, its source, its date and which currency is payable.
- Put the payment block and the charges line on your template, so every invoice inherits them.
Then the invoice really is a checklist.
The part no template fixes is whether the hours are right. If your invoices start from time and you want the record without maintaining it, Stunda records your working time in the background, sorts it into clients and projects, and turns it into invoice lines. The currency decision stays yours.
Questions people ask
Should I invoice a US client in US dollars?
Only if you have a reason to. Billing in dollars makes paying easy for the client but moves the exchange rate risk onto you for the whole payment window. It makes most sense when you can hold dollars, have costs in dollars, or the client cannot pay in anything else. Otherwise, invoice in your own currency and let the client convert.
What exchange rate should I use on an invoice?
Use a published reference rate that anyone can look up later, such as a central bank's daily rate, and tie it to a stated date, usually the invoice date. Print the rate, its source and its date beside the converted figure, and say plainly which currency is payable. Which rate your own accounts use is a separate question for your accountant.
What does reverse charge mean on an invoice?
It means the customer, not the supplier, accounts for the VAT. In the EU it applies when a business buys services that are taxed where the customer is established, from a supplier not established in the customer's country. Instead of a VAT amount, the invoice carries the customer's VAT number and the words reverse charge, and the customer deals with the tax itself.
Do I charge VAT to a client in another country?
Often not for business clients. Under the general EU and UK rules, a service sold to a business is taxed in the customer's country, so you usually leave your own VAT off and, in the EU, note the reverse charge instead. Private clients and some types of service follow different rules, so confirm your case with an accountant first.
Who pays the bank fees on an international payment?
Whoever you agree pays them, so agree it before the first invoice. A wire can be sent with the sender covering all charges, with the charges shared, or with the recipient covering them, and intermediary banks may take a cut on the way. State your expectation on the invoice and check the amount received against the amount invoiced.
How long should payment terms be for international clients?
As short as the client will accept, because when you invoice in a foreign currency every extra day is another day of exchange rate movement. Fourteen days is a reasonable ask. Write the due date as a calendar date rather than net 30, since accounts teams do not all count net terms from the same starting point.