The currency on your invoice decides who pays for the conversion and who takes the hit if the exchange rate moves between the day you invoice and the day you get paid. There is no single answer, but there is a clear way to decide.
If you invoice in your own currency
You invoice a US client €4,500. You receive €4,500, less your provider's fees. The conversion is done by your client's bank or card, and the exchange-rate risk is theirs too: if the dollar falls before they pay, it costs them more.
For you it is the most predictable option. The problem is that you pass a cost and a hassle on to the client. Many US cards charge a foreign transaction fee (often around 3%, though some charge nothing), and a purchasing department does not like paying an amount when it cannot tell what it will cost in dollars.
What you save is real. With Stripe and an account in Spain, a $5,000.00 card payment costs you $254.60 when there is a conversion. If the invoice is already in euros and the client's card pays in euros, the conversion line ($96.85) disappears, and you are left with about $157.75 in card fee and foreign-card surcharge.
- Card fee
- Cross-border
- Conversion
- Payout
If you invoice in your client's currency
You invoice $5,000.00. For the client it is the easiest option: they pay a round figure in their own currency, like any local supplier. That counts for more than it seems when you compete with suppliers in their country.
In exchange, you take on two things: the conversion (which you do, through your provider) and the risk of the rate moving between the invoice date and the payment date. On 30-day terms, a move of a couple of points in the exchange rate is not unusual, and it can go for you or against you.
If you have bank details in the client's currency, the conversion is cheap: on Wise, converting that $5,000.00 to euros costs $14.50. If you do not, and the client pays by card through a processor, it is the most expensive option there is.
The rule I use
- Invoice in the client's currency if you have a cheap way to receive it: an account with local details in that currency and a conversion with a low markup. The client gets convenience and you lose very little.
- Invoice in your own currency if the alternative is a card payment with automatic conversion. That conversion is where the money goes, and this takes it away from your processor.
- On long projects or large amounts, fix the rate in the contract or invoice by milestone, so neither side carries months of rate movement.
International wires and who pays the bank fees
If your client pays by SWIFT, the payment order carries a code that decides who pays the bank charges: OUR (the sender pays them all), SHA (each bank charges its own customer) or BEN (the recipient pays them all, taken out of the amount). If you invoice an exact figure and want all of it, ask for OUR on the invoice. With SHA, expect slightly less than you invoiced to arrive.
What to put on the invoice
- The currency, written without ambiguity: "USD" or "EUR", not just "$".
- The bank details that match that currency. A dollar invoice with a euro IBAN forces your client's bank to convert, which is exactly what you wanted to avoid.
- If you accept cards, the currency the card will be charged in.
To see how much conversion takes in your case, use the calculator. And if the conversion markup is still fuzzy, start with this guide.
Every figure in this guide is calculated from the providers' public pricing pages, with the same function as the calculator. See the methodology for what the model includes and leaves out.