How to invoice international clients

The world is your marketplace! In today’s interconnected world, it’s easier for businesses to reach a global audience. This opens doors to growth opportunities, multiple streams of income, and valuable market insights. Whether you’re a freelancer or own a small business, effectively invoicing international clients is key to unlocking the full potential of going global. In this guide, we’ll break down everything you need to know about international invoice requirements, ensuring a smooth experience for both you and your clients.

What makes international invoicing different?

Regular invoicing (see our article on what is an invoice), involves sending a payment notice to a client for services rendered. International invoice formatting is similar, but there are a few things to consider that can add complications if not addressed:

• Currency: You’ll need to decide on a currency for your invoice. This could be your home currency, the client’s currency, or a third-party currency. Choosing the right currency is really important because exchange rate fluctuations can affect your net profit.
• Tax regulations: Taxes can get tricky across borders. Understanding Value Added Tax (VAT) and other international tax implications is a must. Not factoring in VAT and tax regulations can lead to delays, penalties, and frustration for both you and your client.
• Language: Even though English is widely used in business, catering to your client’s language can go a long way in building trust. Imagine receiving an invoice in a language you don’t understand – it wouldn’t exactly inspire confidence, would it?

By keeping these things in mind, you can create clear and compliant international client invoices that’ll benefit you and your clients.

Learn more about compliance from the Medius website.

Setting up for international payments

Before diving into invoices, let’s talk about getting paid. How to invoice an international client is only half the battle. You’ll need a reliable system for receiving payments across borders. Here are a few options to consider, each with its own advantages and drawbacks:

• Bank transfers: A traditional option and widely available but usually with high fees, especially for international transactions. These fees can eat into your profits, so keep that in mind when determining your pricing. The high cost of transfer fees can be a deterrent for some clients.
• Wire transfers: Faster than bank transfers, but usually even more expensive. While speed may be important for some transactions, the high cost can be a deterrent for some clients.
• Online payment platforms: Services like Wire and PayPal are convenient online payment options and usually offer lower fees than traditional bank transfers. There may be limits on transaction amounts, so make sure to research the different options before choosing one. Online payments are convenient and can be an attractive option for both you and your client.

When deciding on a payment method with your client, be transparent about any fees that’ll come along with it. Don’t surprise them with hidden charges later!

Bonus Tip: It may be worth offering a small discount for early payments to encourage quick payment from your international clients. Discounts may feel like you’re taking a hit, but it can go a long way in encouraging faster payments and improving cash flow.

Deciding on the best currency conversion

The world of currency exchange rates can seem intimidating, but choosing the right currency for your international invoices can be a benefit if done right. Here are your options, each with its pros and cons:

• Your home currency: This simplifies things for you from an accounting standpoint, but may not be ideal for your client, especially if their currency is experiencing significant fluctuations. They may be hesitant to pay if they feel they’re getting a bad deal due to exchange rates.
• The client’s currency: This shows your client you’re customer-focused and willing to go the extra mile, but exposes you to potential exchange rate fluctuations. If the client’s currency weakens, you could end up receiving less than you anticipated.
• A neutral third-party currency: This provides a middle ground, but can add complexity for both parties. You’ll need to agree on a currency like the UK pound or Euro, and both you and your client will be subject to exchange rate fluctuations.

The best option depends on your business, your client’s location, and your risk tolerance. Discuss this openly with your client to find a solution that suits you both.

Here are some additional tips for navigating currency conversions:

• Lock in exchange rates: Consider using a service like Wise (formerly TransferWise) to lock in an exchange rate for a future date. This can provide certainty and protect you from unexpected fluctuations.
• Communicate clearly: Be upfront with your client about the chosen currency and any associated exchange rate considerations. Transparency builds trust and avoids confusion down the line.

Learn more about payment methods: trade.gov

How to make an invoice to international clients?

While how you format an invoice for international clients is similar to the invoices you prepare for your local clients, there are some extra details to add to your international invoice format:

Essential information on the invoice

• Your business information: Include your full legal business name, registration number (if applicable) and address.
• Client information: Ensure you have your client’s full legal business name and registered address.
• Invoice number: Assign a unique invoice number for easy reference.
• Invoice date: Clearly state the date the invoice was issued.
• Description of services: Clearly detail the services provided, including quantities and rates.
• Currency: Clearly state the currency used for the invoice.
• Amount due: Clearly state the total amount due, including any applicable taxes or fees.
• Payment terms: Include the due date for payment and your preferred payment methods.
• Tax information: If it applies to you, add details of any VAT or other taxes included in the invoice amount. You may want to consult with an accountant to make sure you’re handling international tax implications correctly.

Going global with your business is an exciting step, and with the right tools and strategies, it doesn’t have to be complicated. By understanding the ins and outs of international invoicing, including currency conversion, tax considerations, and clear communication, you can guarantee a smooth experience for both you and your clients.

Bookipi offers a user-friendly invoice software solution and invoice templates that allow you to easily create professional invoices for your local and international clients. This simplifies the invoicing process, saving you time and ensuring you get paid efficiently, no matter where in the world your clients are. Bookipi invoice app is an all-in-one invoice maker and organizer.