Getting-paid guides · 17

Dollars, euros or your own currency: who carries the exchange rate?Settle the currency before you send the quote. Then decide where the money lands and when to convert it.

A German client sends over a contract with EUR 3,000 in the fee box. You are in Manila, and at the European Central Bank's reference rate for 24 September, one euro buys about 71.3 Philippine pesos, so the job is worth roughly PHP 214,000. Say it runs three months, the euro slips 3% against the peso in that time, and the payment comes through PayPal, which converts it to dollars at a 3% spread. You end up about PHP 12,600 short of what you counted on when you signed. The client paid every cent; the money leaked out through the exchange rate and the conversions. Most of that can be avoided by thinking about the currency before you quote.

01Whoever's currency is on the invoice, the other side carries the risk

The currency on your quote decides who absorbs exchange-rate moves. The same job plays out three different ways:

• Quote in the client's currency, say EUR 3,000. The client always pays the same number, and every move in the euro lands on you.
• Quote in your own currency, say PHP 214,000. What you receive is fixed; the client has to work out the euro amount each time, so the risk sits with them. Plenty of overseas companies can't or won't pay in your currency, so this is often a hard sell.
• Quote in a third currency, usually US dollars. Neither of you settles in your home currency, and the rate risk is split between you. It is the most common arrangement in cross-border freelancing.

Picking a currency, then, is really picking how much of the rate swing you are willing to carry yourself.

02Which option suits which client

On a project of two or three weeks, rates rarely move far enough to matter, so quoting in the client's currency and letting them pay easily usually wins. When the work is billed monthly, runs for half a year or involves a large sum, the currency is worth negotiating, at least as far as dollars.

03How many times a euro payment gets converted

The number of conversions is easier to overlook than the rate itself, and every conversion hands someone a spread. Same German client, same EUR 3,000, three common routes:

• You have euro receiving details, which Wise and Payoneer can both give you. The client makes a local euro transfer, the money arrives as euros, and you convert once, when you choose. One conversion.
• You quoted in dollars. The client's bank converts euros to dollars to pay you, then you convert dollars to pesos. Two conversions, and the first spread is hidden on the client's side, where it can look like you cost more than agreed.
• The client pays euros by PayPal and your PayPal account only holds dollars. PayPal converts the euros, and its US consumer fee page lists a 3.00% spread for conversions when receiving. That step alone takes EUR 90, about PHP 6,400, and there is another conversion when you withdraw to your bank.

The rule is short: receive in the original currency whenever you can, because each conversion you skip is a spread you keep. If you quote in the client's currency, have an account in that currency ready to catch it; if all you have is a dollar account, quote in dollars and don't let the money be converted twice on the way.

04Catch the money in its own currency

A receiving account in a given currency is a set of local payment details in the client's country: an IBAN for euros, a sort code and account number for pounds, a routing number and account number for US dollars by ACH. The client pays with an ordinary local transfer instead of an international wire.

Wise charges nothing to receive local payments in most currencies, and in US dollars only domestic wires carry a fee. Payoneer's receiving account is free when it is in your local currency and costs 1%, minimum 1 USD, when it isn't. For the conversion itself, Wise lists the rate and the fee before you confirm; Payoneer builds its conversion fee into the rate, and the Fees page in your account shows the exact figure. For how the two compare, see Wise vs Payoneer by client type.

Once the money is in, it can sit in its original currency until a moment that suits you, or go straight out again to pay foreign subscriptions, equipment or subcontractors, which saves a conversion in each direction.

05A currency clause for longer contracts

For a one-off job, naming the currency is enough. For a monthly retainer or a contract that runs six months or more, a sentence or two more helps. Adapt either of these:

This fixes the currency and leaves the client's own bank and conversion costs with the client, so your payment doesn't shrink before it even leaves their bank.

The second clause changes neither the amount nor the rate anything is paid at. It only gives both sides the right to sit down and rework the price of work not yet invoiced once the rate has moved more than 5%. Using the ECB reference rate as the yardstick means the number is public and nobody can argue about it. Note that the ECB says on the page that the rates are for information only and that using them for transactions is strongly discouraged, so they suit measuring how far a rate has moved, not a line saying "payment at this rate".

If the project is invoiced in stages, you can also reconfirm the price at the current rate before each stage starts, which cuts the risk into small pieces; deposits and staged payments shows how to set that up.

06When to convert once the money arrives

Nobody calls exchange rates reliably, so this is a routine that doesn't depend on guessing:

• Living costs for the next month or two: convert as soon as the money lands. Don't make rent wait on the rate.
• Foreign subscriptions, equipment or subcontractors: pay them straight from the original currency.
• Whatever is left: convert in instalments, say a fixed day each month, rather than betting the whole sum on one day.

Don't leave foreign currency sitting on a platform for a year either, for the same reason as in not keeping all your income in one account: if the account gets restricted, the money is stuck.

Before a large conversion, ask your bank one more question: some countries cap or track personal currency conversions, and the bank can tell you the threshold and what papers it wants.

Each time you convert, note the date, the amount and the rate you actually got; you will need them for tax and for reconciling the year, as set out in keeping records of your international payments.

07Ways freelancers lose money on currency

• Converting your price into euros at today's rate and sending the quote with no expiry date. The client signs a month later, after the rate has moved. A line saying "this quote is valid for 14 days" prevents it.
• Quoting in the client's currency while holding only a dollar account. The money gets converted twice on the way, and the favour you did the client ends up costing you an extra spread.
• Telling the client "pay in whatever currency you like". They will pick what is easiest for them, often a card or PayPal, which tends to be the most expensive route for you.
• Agonising over currency on platform work. Upwork and similar sites mostly settle in dollars under their own rules, so the currency isn't yours to choose; what you control is the withdrawal and conversion cost, which belongs in your quote.

08FAQ

09What to read next