How to invoice in a foreign currency

Invoice in the currency you agreed, state it explicitly, and record the exchange rate on the date of the invoice for your own tax return.

Two traps. First, ambiguity: "$" could be US, Canadian, Australian or Singapore dollars. Write the ISO code — USD, CAD, AUD, SGD — somewhere on the document.

Second, the tax side: your own tax return is almost certainly in your home currency, so you need the rate on the invoice date, not the rate on the day the money arrived. Keep a note of it with the invoice. Some tax authorities specify which published rate to use.

Also agree who absorbs the transfer fees. An international payment can arrive 15–40 short, and if that has not been discussed the client will assume it is your problem.

Agree the currency before the work

Whoever does not invoice in their own currency carries the exchange risk. That is a commercial decision worth making deliberately rather than discovering when the payment lands 6% short.

And write it unambiguously. "$4,100" spans the US, Canada, Australia, Singapore, New Zealand and more. "USD 4,100" does not. This is a real dispute, not a theoretical one.

Your own tax figures usually must be in your own currency

Most tax authorities require the tax amount to be shown in the local currency even when the invoice itself is in another. The UAE requires the VAT figure in dirhams; the UK requires sterling; several EU states require euro equivalents. The invoice can be in the customer's currency provided your tax figure is also stated in yours.

Which exchange rate

Not the one you feel like. The rules are usually specific: a central bank rate, a published official rate, or a commercial rate applied consistently, taken at the date of supply or the invoice date. The UAE specifies the Central Bank rate; other countries publish monthly rates; some allow your bank's rate if you apply it consistently.

The consistency requirement matters as much as the source. Choosing the favourable rate per invoice is exactly what the rules exist to prevent.

Where the money goes missing

Three leaks, and together they can take 5–8% out of a small invoice:

• The sending bank's margin on the exchange, which is usually invisible.
• Correspondent bank fees, deducted in transit, so you receive less than was sent and neither side knows exactly why.
• Your own receiving fee.

State on the invoice who bears transfer charges. "All bank charges to be borne by the payer" is a normal term, and without it you will absorb them by default.

Exchange differences are a real accounting item

Invoice in euros, get paid three weeks later, and the amount in your own currency will differ from what you recorded. That difference is a foreign-exchange gain or loss and belongs in your accounts as one — not as an adjustment to the sale. Your accountant will want to see it separately. Getting invoices ready for your accountant covers flagging it.

Practical ways to lose less

A multi-currency account that lets you hold the currency rather than converting on arrival. Agreeing a fixed rate for the duration of a project, which suits both sides on longer work. Or simply invoicing in your own currency and letting the customer handle it — the simplest option, and available more often than people assume.

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