Invoicing itself can be a time-consuming yet important accounting task for your business. Even if you are a freelancer or self-employed, accounting documentation are regulatory and rules may vary in different countries.
Invoicing international clients adds to the complexity. You would need to consider international taxes and foreign currencies in filing your income taxes. Here are four things to consider when invoicing international clients.
Questions to ask when invoicing international clients
- What to put on your invoice?
- What is the best method for receiving international payments?
- Are international taxes involved?
- Will I be invoicing many international clients in future?
1. What to put on your invoice?
- Business logo
- Business name and address
- Tax number (if applicable)
Essential details that will vary according to each invoice:
- Customer company, name, contact details
- Details of good or service supplied (example: description, quantity)
- Unique invoice number
- Date of invoice issue
- Taxes (if applicable)
- How to make payment
- Total amount payable in agreed currency (receiving currency)
- Payment terms, including small penalty for late payment
**The last two terms are crucial. Exchange rate fluctuates daily. If you are charging in non-local currencies, the payment terms and currency conversion will affect how much you eventually receive as payment.
2. What is the best method for receiving international payments?
Speed, convenience, security or cost-effectiveness – which matters most to you? A suitable payment method will depend on your immediate business priorities. You may want to consider the currency and how much you’re invoicing for the best payment methods.
3. Are overseas taxes involved?
Each country has their own tax requirements. Depending on which country you are selling to, you will have to abide to the regulation and tax requirements of the buyer’s country.
For example, if you are selling to Singapore, all goods and services are subject to a standard rate GST of 7% (expected to rise to 9% sometime between 2021 to 2025). The good news for you and your customers is that you can zero-rate most of your goods and services delivered outside of Singapore. Read more about GST guide for eCommerce.
To avoid high fines and unwanted taxes from incorrect invoices, you are expected to stay tax compliant in the residing country you do business.
4. Are you invoicing international clients in the future?
You have just tried invoicing an international client; it makes things a lot easier after your first try. Consider automating your invoice process by e-Invoicing. E-Invoicing helps the non-accountant and business owner improve efficiency, reduce cost and easily manage their invoice keeping. One tactic is to adopt an accounting solution that is available for free or at a small cost.
The options below are all web-based; this means you do not have to install a software. All you need is a web browser like chrome or safari. You can also install their mobile app on iOS and android while you are on the move.
For freelancers or start-ups. A free accounting software for small businesses looking to invoice less than five customers.
For medium-sized firms. Unlimited income and expense tracking, personalise your invoices, and provide online payments to your clients. (Note: a 3.4% credit card fee + $0.50 per transaction incurred to merchants).
A one-stop cloud accounting software for medium to large-sized companies. You can manage payroll, invoicing, inventory, multi-currency accounting and more. Though it is not free, you get a one-month trial. With Xero, you are able to see bank feeds. Once you have connected your bank to Xero, this allows you to reconcile banks transactions automatically on Xero.
As your business grows, you may consider investing in an accounting software that helps to manage different currencies, multiple clients, payments due and even keep track of tax payable and HR payroll.
WorldFirst is an innovative global payment platform, helping businesses and people prosper by making the movement of money around the world faster, easier, safer and cheaper. Established in 2004, the international transfer service has facilitated over £70 Billion in transfers for over 400,000 customers and 150,000 businesses globally.
Disclaimer: These comments are the views and opinions of the author and should not be construed as advice. You should act using your own information and judgement. Whilst information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice. Please consider FX derivatives are high risk, provide volatile returns and do not guarantee profits. We have no commercial affiliation with any organisation or commercial interest regarding the venues mentioned in this article. The information is only provided as gathered and should be verified before, using your own judgement.