Invoicing in USD
Discussion
Good morning all, we have just signed a contract with the US parent of a UK client and the US company has asked us to invoice them in USD and they pay in USD.
It's the first time i've done this so not sure of the best way of doing it without it costing us. The bank charges we will invoice but not sure what exchange rate to use and what happens if there is any change in exchange rates between invoice and payment, usually around 40 days.
It isn't a massive contract, £3k per month for 12 months.
How have others done this?
Thanks in advance.
It's the first time i've done this so not sure of the best way of doing it without it costing us. The bank charges we will invoice but not sure what exchange rate to use and what happens if there is any change in exchange rates between invoice and payment, usually around 40 days.
It isn't a massive contract, £3k per month for 12 months.
How have others done this?
Thanks in advance.
Unless the contract specifies that you will invoice in USD don't.
If it does, and no mention of exchange rates was made, or if it doesn't and you feel you are left with no option ... then advise them you will be using an exchange rate of 1.75 to convert your invoices from GBP to USD.
No reason why you should cover their exposure to currency fluctuations.
Had a similar "demand" over 10 years ago ... told them the USD rate compared to the GBP rate ... they were happy to be billed and to pay in GBP.
Edit to be clear ....
GBP 3000 per month, invoiced and paid in GBP; or
USD 5250 per month, invoiced and paid in USD.
Their choice.
If it does, and no mention of exchange rates was made, or if it doesn't and you feel you are left with no option ... then advise them you will be using an exchange rate of 1.75 to convert your invoices from GBP to USD.
No reason why you should cover their exposure to currency fluctuations.
Had a similar "demand" over 10 years ago ... told them the USD rate compared to the GBP rate ... they were happy to be billed and to pay in GBP.
Edit to be clear ....
GBP 3000 per month, invoiced and paid in GBP; or
USD 5250 per month, invoiced and paid in USD.
Their choice.
Edited by sgrimshaw on Tuesday 3rd October 11:17
I bill USD and EUR quite a bit. And for similar amounts.
I would open a specific USD account with your bank. This is simple enough and lessens the exposure to currency fluctuations as the Dollars are paid into a Dollar account. Unless you need access to the money, you can leave it there until the exchange rate is more favourable (obviously a risk that this can take a while).
It sounds to me as though the price has been agreed and that price is in USD. That being the case, it's unlikely that you'll be able to charge additional to cover anything else - it's up to you to have worked out if it was worth your while when costing the job, product or service. But no harm in asking.
Either way, it's going to cost you but rarely is it much to worry about. Starling Bank charge a 0.4% conversion fee so that's just 12 quid each month.
I would open a specific USD account with your bank. This is simple enough and lessens the exposure to currency fluctuations as the Dollars are paid into a Dollar account. Unless you need access to the money, you can leave it there until the exchange rate is more favourable (obviously a risk that this can take a while).
It sounds to me as though the price has been agreed and that price is in USD. That being the case, it's unlikely that you'll be able to charge additional to cover anything else - it's up to you to have worked out if it was worth your while when costing the job, product or service. But no harm in asking.
sgrimshaw said:
advise them you will be using an exchange rate of 1.75 to convert your invoices from GBP to USD
My 'USD' clients are the World Bank and United Nations and a few other similar institutions. 1.75 is the standard conversion metric used on all bids, tenders and pricing so a pretty sound basis on which to work from.Either way, it's going to cost you but rarely is it much to worry about. Starling Bank charge a 0.4% conversion fee so that's just 12 quid each month.
Also watch out for bank charges on the USA side. USA banks seem to often charge a fee for (any) payment, so you may find every USD payment is short by 18-35 USD. Try to put wording on your invoice such that they are liable for their bank charges. If you invoice 1000 USD, you should expect 1000 USD to arrive in your bank.
It's small but adds up over time, especially if you do little transactions.
Wise is an easy-to-use way to get a USD account.
It's small but adds up over time, especially if you do little transactions.
Wise is an easy-to-use way to get a USD account.
If you want to deal with a US client they will usually always stipulate they pay in USD, not much you can do about that. If you want to have certainty with your rate of conversion you can contact a currency broker and forward sell the dollars at a fixed price.
As others mentioned, a wise business account would be a good shout, it’s the cheapest place to change them to GBP and if you want to play the currency exchange rates you can hold it in there and get around 4.8% interest too.
As others mentioned, a wise business account would be a good shout, it’s the cheapest place to change them to GBP and if you want to play the currency exchange rates you can hold it in there and get around 4.8% interest too.
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