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What is the best way to handle invoicing for multiple currencies?

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If you run a business that serves customers in different countries, you know the challenge of invoicing for multiple currencies. You want to make sure you get paid on time and in full, without losing money on exchange rates or fees. You also want to keep your customers happy and avoid confusion or disputes. How can you handle invoicing for multiple currencies in a way that works for both you and your customers? Here are some tips and best practices to consider.

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Haytham M. Azmy - MBA, CTP

CFO @ iSON Xperiences Egypt | MBA in Finance

1 Choose a base currency

The first step is to decide on a base currency for your business. This is the currency that you use to track your income, expenses, taxes, and accounting. You should choose a base currency that matches your legal entity, bank account, and main market. For example, if you are registered in the US and most of your customers are in the US, your base currency should be USD. Having a base currency will help you simplify your bookkeeping and reporting, and avoid currency fluctuations.

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Adnan Ali Khan N.

Accounting | Finance | Budgeting & Forecasting | Financial Modelling | External Audit | Internal Audit | Operations Audit | Internal Controls | Risk Assurance & Compliance | Project Costing | Management Accounting
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Selecting a base currency for your business marks the initial step. This currency tracks income, expenses, taxes, and accounting. Align your base currency with your legal entity, bank account, and primary market. For instance, if you operate in the US with US-centric transactions, opt for USD. A base currency streamlines bookkeeping, reporting, and mitigates currency fluctuations, enhancing financial clarity and stability within your business operations.

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2 Offer multiple payment options

The next step is to offer multiple payment options to your customers, so they can pay you in their preferred currency. You can use online payment platforms, such as PayPal or Stripe, that support multiple currencies and automatically convert them to your base currency. You can also set up separate bank accounts or use third-party services, such as TransferWise or CurrencyFair, that allow you to receive payments in different currencies and transfer them to your base currency at low fees. Offering multiple payment options will help you attract more customers and reduce payment delays.

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3 Set clear payment terms

The third step is to set clear payment terms for your invoices, such as due date, late fees, and currency conversion method. You should communicate these terms to your customers before you start working with them, and include them in your contracts and invoices. You should also specify how you will handle currency fluctuations, such as using the exchange rate on the invoice date, the payment date, or an average rate. Setting clear payment terms will help you avoid misunderstandings and disputes, and protect your cash flow.

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4 Use invoicing software

The fourth step is to use invoicing software that supports multiple currencies and automates the invoicing process. You can use cloud-based invoicing software, such as FreshBooks or Xero, that allow you to create and send invoices in different currencies, track payments, and integrate with your accounting software. You can also use invoicing software that connects with your online payment platforms, such as Invoice Ninja or Zoho Invoice, that allow you to accept payments in different currencies and automatically update your invoices. Using invoicing software will help you save time and money, and improve your invoicing accuracy and efficiency.

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5 Review your invoicing performance

The final step is to review your invoicing performance and look for ways to improve it. You should monitor your key invoicing metrics, such as average payment time, payment success rate, payment method distribution, and currency conversion costs. You should also solicit feedback from your customers, such as how easy it was to pay you, how satisfied they were with the invoicing process, and how likely they are to recommend you. Reviewing your invoicing performance will help you identify and address any issues, and optimize your invoicing strategy.

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Haytham M. Azmy - MBA, CTP

CFO @ iSON Xperiences Egypt | MBA in Finance
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From accounting prospective, you need to keep an eye on the base currency used locally, and ensure proper evaluation on a monthly bases for the unrealized FX gain / loss, till final collection and recognizing the realized amount. This will affect your tax return. For invoicing and collection process, it would be good that you have multiple collection methods as well as multiple currency bank account. Then this would help your treasury team arranging for your cash flow proactively.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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What is the best way to handle invoicing for multiple currencies?

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1 Choose a base currency

2 Offer multiple payment options

3 Set clear payment terms

4 Use invoicing software

5 Review your invoicing performance

6 Here’s what else to consider

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