Dealing with suppliers can be a challenge in itself, all with different payment terms and preferred modes of payment. The waters can be muddied further when dealing with international suppliers which prefer to submit invoices in a foreign currency or request your invoice in another currency.
Thankfully there are a number of solutions available to small and medium-sized businesses that make arranging foreign currency invoicing simpler. The currency converter helps users determine the value of the foreign currency in terms of the local currency. Currency rate forecasts play a vital role in international trade.
Below are a few factors to bear in mind when going done this route and ensuring your business isn’t caught off by dealing in foreign currencies.
Benefit of invoicing in a foreign currency
A clear benefit of allowing payment or invoicing in a foreign currency is that your service or product is then opened up to a completely new market. If you work in a niche sector or facilitate most of your business online the ability to pay in local currency will be hugely attractive to prospective clients.
• There is no exchange rate risk involved in invoicing international clients in foreign currencies.
• Retail businesses prefer the Forward Exchange Contracts or the forward cover from banks to hedge against currency fluctuations. Even if the currency exchange rate moves adversely, it will remain safe from price volatility.
• It eliminates postal address mistakes through electronic transfer.
Purpose of an Invoice
An invoice is a business record that describes the goods and services offered to a customer. It shows the liability of the customer towards the service rendered. The invoice should have the date and number, and it should specify the payment terms, the due dates, and the total amount due. It must describe the goods or services provided. In particular, you must know how to invoice international clients from India and China, as there are many freelance works done from these countries. Freelance work between UK and India, requires UK currency to Indian rupees exchange rates.
• It is a record of the sale or supply of goods and services
• It is used as historical data for the business to predict future trends.
• It is a reminder for the customer to make on-time payments.
• It is used for tax purposes.
• The forecast currency exchange rates are used for the purpose of hedging against international currencies.
Currency Converters in International Trading and Invoicing
Use the currency converter while invoicing in foreign currencies. While trading with companies across various countries, refer to live currency rates to get the most up-to-date currency rate forecast, as the forex market is volatile. Users prefer the currency exchange calculator tool, which is easy to use and is frequently updated. It is best to keep track of the forex exchange currency rates of all the world currencies here. Choose the best currency exchange to interchange currencies. We find that currency converter Dollars to Pounds, and currency converter USD to GBP are the most used.
Freelancers work from every remote part of the world. The internet helps freelancers reach out to clients who can provide good work. Be aware of the foreign exchange rates and fees. The currency converter UK offers users the updated rates of foreign currencies. If you are not careful, your conversion fee may cost more. Some options carry exorbitant hidden fees. Avoid currency exchange desks at major hotels and airports, which charge a high transfer fee.
To calculate exchange rates, use a simple formula
• Exchange Rate Calculation = Original Currency / New Currency
• If you want to exchange 1 GBP to USD, you have to pay 1.3058 Dollars for 1 Euro. The currency converter does the conversion. For example, for 1 Euro to GBP, you have to pay 1.2080 British Pound for 1 Euro, as per the exchange rate in April 2022.
• With live currency rates, calculation of exchange rates becomes easy.
It’s probably worthwhile doing some market and competition research beforehand to ensure that the set up is worth the effort you are going to make in order to operate globally.
Once you have decided to take the plunge you will need to either establish a multi-currency bank account or set up a business trading facility with an foreign exchange broker. The corporate currency exchange makes it easy for leading entrepreneurs to conduct international business.
Alternatively you can set up both, and hold funds in a foreign currency bank account until the point you wish to repatriate them back to your base currency or operating currency, likewise a specialist foreign exchange broker who holds an E-money license will be able to hold funds for you in a segregated account for as long as you require.
Establishing a foreign currency or multi-currency account
Opening up a local foreign currency account will almost certainly be challenging with criteria changing from country to country and even state to state. If you speak or have a colleague who speaks the local the language it might be slightly easier however the process will almost certainly be time-consuming and potentially costly.
Freelancing has made it mandatory to establish a multi-currency account. Forex charts will help you determine foreign exchange currency rates across multiple currency pairs. Select the payment currency and refer to the forex charts to estimate your payment amount. Most users prefer currency payment in the US Dollar. Sometimes, it is best to make the transfer in the client’s currency. Don’t forget the currency conversion fee, as it is a small but significant portion of your payment.
An alternative option could be to consider a currency or multi-currency facility with your current bank or a bank you are familiar with. Banks are well aware of the global requirements needed by smaller online businesses and institutions such as Lloyds and HSBC who are more than willing to cater to their requirements.
A foreign bank account couple with a specialist foreign exchange broker can ensure that transfer fees are equally well managed with providers such as Currencies Direct offer solutions which allow small businesses to make fee-free transfers online, via their App or over the phone.
If, however, you intend on regularly exchanging currency acquired from foreign currency invoicing a currency specialist may be able to cover all of your requirement. Currencies Direct for example offer wallets allowing you to convert currencies between these wallets. Therefore, if you had an invoice being paid in Euros but needed to pay a supplier in USD you could effectively covert the Euros into USD and send the money immediately.
Many will also provide a platform to which will effectively allow you to collate your individual invoice payments and pay a multitude of payments in a few clicks. A multi payments system operator can be extremely effective for companies such as:
- Travel operators
- Royalties companies or trustees
- International payroll companies
These platforms will typically interact well with your accountancy software allowing you to copy and a CSV file or similar and make swift payments to any outstanding foreign currency payments.
Invoicing in a foreign currency
Leading accountancy software providers will provide a number of solutions to help you mitigate the risks of accepting foreign currency invoices and submitting foreign currency invoices to your clients. Sage, for example, offers add-on modules to its standard software for just this purpose. Their Foreign trader module will assist with:
- Creating invoices in multiple currencies
- Record client purchases in Foreign currencies
- Help manage FX rate fluctuation
- Add any foreign currency bank accounts the company has
It will help your company remain compliant with local taxation rules and provide better insight into your overseas trade activity, automatically calculate exchange rate fluctuations helping avoid FX losses or fees. Invoicing international clients in a foreign language makes it easier for your customer to pay. It demonstrates the extra step you take toward customer service.
How To Invoice International Clients?
Each country has laws that determine the issue of international invoices. The invoice is a document used in the accounting system of a small business.
While invoicing international clients, make things simple and easy. Provide for exchange rates and currency fluctuations.
• Mention the currency: Mention the chosen currency and the country you are paying to.
• Automated invoices: They reduce your accounting work.
• Real-time payment tracking: You get a quick insight on overdue payments or cash flow.
• Payment Reminders: It prevents you from making late payments.
• Tax Laws: Prepare your invoice to meet regional tax laws.
• Cashflow: Keep track of the payment process.
• Clarity in terms of the sale: Ensure clarity while establishing your terms of sale to mitigate risk.
Tips to Know How to Invoice International Clients from India
Business transactions in India require invoices that comply with the GST rules and the Indian Customs law. Asian countries like India, Bangladesh, and Singapore are top countries to freelance in. It is best to know how to invoice international clients from India and other Asian countries.
The GST invoice should cover various details that meet the CGST Rule 46.
• The GST number and customer details.
• Supplier details and GST number.
• Invoice number and date, cost of goods/service, the quantity of goods/services, discount applied (if any).
• GST rates regarding the SGST, IGST, and CGST.
Mitigating foreign exchange risk with an foreign exchange broker
Once all of your accounts and software is correctly set up in order for your company to maximise the new opportunities available it’s advisable to arrange a call with an foreign exchange broker. Ideally, outlay your plans and explain your objective and the currency pairs you anticipate you will be invoicing or receiving from international clients.
Your account manager will be able to advise on ways of fixing an exchange rate for a currency pair you are looking to trade in. This process can be extremely worthwhile when dealing with weakening currencies or volatile currency pairs and essentially protects your profitability avoiding FX risks.
Your account manager will also be able to advise on the type of account you require. If you are looking to make hundreds of payments, he will direct you to a mass payments product. Likewise, if the majority of your business is generated by selling on online marketplaces he will run you through their online sellers and e-tailers products.
The more established and seasoned you become in international markets the more effective your collaboration with an foreign exchange broker will become. Once you know roughly how much foreign currency you will receive over the year the risk of currency fluctuation can be eliminated.
Your company’s pricing can also be set and compensate for a % of currency movement and you can target rates to benefit from FX fluctuation that move in your favour. If all of the above is executed correctly what might have seemed initially daunting could equate to the best opportunity your company has ever seized. Especially when correctly managed currency accounts and FX fluctuations can equate to improved profitability and company growth.
Reasons to Choose a Foreign Exchange Broker
Global business transactions are shooting up in recent times. UNCTAD’s Global Trade Update states that international trade touched a record high of $28.5 trillion in value in 2021. Cross border trade is increasing in both developed and developing countries. UNCTAD reports that trade growth will continue to soar higher. Huge economic stimulus packages provided in major countries have increased the demand for goods and services in global trade.
• It eliminates the need for financial and legal paperwork.
• You get hassle-free and cost-effective services.
• The payment processing process is quicker and easier with advancing technology.
• Avoid banks that charge big margins with opaque charges.
• You gain information regarding the status of your transaction and real-time push notification.
• Business entrepreneurs have less time to plan forex transactions and need help from specialists who can make the invoicing process of international clients easier.
International Payment Methods
While invoicing international clients, you can offer various payment methods for an easy business transaction.
• Wire transfer
• Open a foreign bank account
• Credit card payment
• Use a third party payment processing.
Foreign Exchange Market
Currency trading through the forex market helps in international trade and investments. Business transactions across borders are increasing The forex market has a huge trading volume due to its high liquidity. Many factors help to determine the forex exchange rates of currency pair.
• Currency trading depends on the demand and supply for the currency and will determine its exchange rate.
• When inflation level is high, it affects the economy, and the currency loses value.
• GDP and employment levels reveal the economic growth of a country. When the country’s economy is robust, its currency price strengthens.
• A stable political condition in a country will bring down currency prices.
Forex Trading for Beginners
The foreign exchange market is complicated and involves a large trading volume. Beginners should know what is forex, and learn about currency exchange rates for their business transactions. Traders should get guidance on what is forex trading, to benefit from price fluctuations in the forex market.
• Forex Market Hours: The forex market works 24 hours a day, as traders come together from different time zones across the globe.
• Forex Demo Account: Beginners can learn about currency conversion through a free demo-account, which is risk free.
• Best Forex Brokers: Beginners can choose the best forex brokers with a range of offerings at low costs.
• Best Forex Trading Platforms: Select the best trading platform that offer customer support and trade execution. The Metatrader is an online trading platform that automates forex trading. The metatrader 4 is a trading platform with easy navigability, designed for beginners.
• Learn Forex Trading: Build your forex skills through educational resources, demo account and in-depth market analysis. Follow a trading strategy and learn to trade. Babypips is a good learning platform for beginners in the forex market.
• Forex charts play an important role in the technical analysis of forex currency pairs to know about the price movement. Line charts and candlestick charts help traders identify the forex trendline in the market.
• Forex News: Forex news keeps you updated on news and events that affect the currency exchange rates. The forex factory news app keeps you connected with important news and happenings within the country.
• Forex trading for beginners: Beginners can learn technical analysis through scalp trade, day trade, swing trade, or positional trade through technical indicators.
If your spouse or family lives abroad or your child is studying abroad, you may receive money from them or make them a payment. Small difference in the foreign exchange rates may dent the net sum you receive or send abroad. Choose the best money transfer series, especially if it involves a lot of money.
Choose popular payment services that have a known presence in global transactions. For international payment, pick a brand with a worldwide presence. Select a secure and established channel to make or receive payments. Ensure that you get live technical support to handle issues that may arise.
Prefer payments methods that are convenient and easy to use. The Oanda currency assists forex trading through mobile converters. It provides a wide range of cross-border transfer benefits for small and large businesses. Compare between money transfer providers and the transaction fees.
Keep in touch with live currency rate updates and benefit from the money transfer. The currency converter calculator gives real-time access to major forex pair prices.