In this article, I want to talk explicitly about how currencies affect client invoicing.

We live in a global business community, trading within Canada and with other countries across the globe. There are 167 official currencies in the world, so your company needs a client invoicing strategy that will meet any eventuality.

Here is a simple case study to get you thinking. An uncle living in Ottawa sends CAD 30 to his nephew in London, UK, for his birthday. What would that be worth to the nephew, after conversion to sterling?

Let’s take a trading scenario. The company that needs invoicing strategies is based here in Canada, and outsources its services around the world as well as domestically. Sure, your Canadian clients will pay in Canadian dollars; this may be cash, credit card, check or PayPal. But what about those transactions outside Canada, say in the USA or Great Britain or mainland Europe – how would your company invoice asking for euros, pounds or US dollars? Do you need to become a walking Wikipedia on exchange rates? How often do you need to convert invoice currencies? Do you check them every day, every week, or at the end of the month? This is called the Spot Rate.

Well I’ve got good news for you as a global trader. There’s software out there to help you and you can obtain templates of advanced template designs. There are advanced template designs and free advice on how and when to invoice, using your company logo, etc.

Various software programs can convert easily enough. Your e-commerce website can be set up to accept payment through a choice of currencies. PayPal will convert currency, as will credit cards. You do need to work out what you’re charging your clients and how this will be invoiced. You need to make things as easy for yourself as possible.

The trading company trades with a client in France – do you charge in Euros having converted? What about foreign exchange fees? Have you considered those?

When you enter into a contract, realize straight away that you may be short changed. A client is given a cost for a service, you invoice them accordingly, but some of this payment may be lost to you.

There is another solution to this – insert currency clauses into contracts for customers. Currencies can fluctuate rapidly and you don’t want to lose out on transactions by unstable, ever changing exchange rates. Put this in client contracts, so they don’t get mad if the job was costed to a UK company at 1,000 CAD, which is £500 for them, only to find that the exchange rate moves rapidly and your 1,000-dollar job costs them £750.

You need to avoid Exchange Rate Fluctuation Risk Mitigation.

What you need to look for is a free printable invoice system that allows Click to Pay across multiple currencies. This is then up-to-date with currency conversions and exchange rates. Making your life and your clients’ lives easier.

Each currency can bring its own set of peculiarities too. There may be restrictions placed by a country’s government on transaction size – this is certainly true of the Ukraine, where 1 CAD equals 16 UAH.

The FX market is incredibly unstable now against other currencies due to falls in oil prices. You need to be aware of this as a Canadian trading company.

Another issue you need to be aware of when billing clients outside Canada is to make sure your payment process is clear to other languages – remember there are 6,500 languages used globally. Your payment system needs to factor this in. This can be done on our free printable invoices.

So to sum up, develop an invoicing system that is manageable for both you and your clients. Search for a software payment system that will reduce some of the fluctuating costs of floating currency. Think about a currency clause in contracts with new customers so there’s less risk in volatile times. Consider carefully any country’s restrictions on currency transactions (like the Ukraine). Use an invoice system that will allow Click to Pay, across different currencies and in different languages. Think carefully too about global economic conditions – such as the current falling oil prices – and how they will affect costs. Look at the charges administered by credit cards, PayPal and your bank plus others when you’re receiving foreign transaction payments.

Finally, focus on your business, making client invoicing across different currencies as uncomplicated as possible.

Leave a Reply

You must be logged in to post a comment.