U.K. Freelance invoicing U.S.

Barry_Spock

I've just done a couple of projects with a US company and about to invoice them. In total it's approx $5500. I was planning on invoicing them in dollars as the exchange rate is in my favour right now, but what kind of exchange rate fees could i be looking at (it's into my personal Halifax bank account) and what other options are there to minimise any fees?

Would appreciate any advice - Thank you!

DullGreyGuy

What does your contract state? 

If it says £200/day you should invoice them in GBP in line with the contract. If its to be converted the contract should state what conversion rate is used. 

If you really want to go against the contract you signed up to then just the preceeding day's spot rate which will only go in your favour if the pound tanks further against the dollar between you writing your invoice and the date they make payment. Any small movements are more likely to be more than wiped out by the currency conversion charged by your bank assuming you dont have a dollar account.

Barry_Spock

DullGreyGuy said:

What does your contract state? 

If it says £200/day you should invoice them in GBP in line with the contract. If its to be converted the contract should state what conversion rate is used. 

If you really want to go against the contract you signed up to then just the preceeding day's spot rate which will only go in your favour if the pound tanks further against the dollar between you writing your invoice and the date they make payment. Any small movements are more likely to be more than wiped out by the currency conversion charged by your bank assuming you dont have a dollar account.

The jobs were based on project fees for each bit - so the client offered an amount per design I produced which i agreed (in dollars).

DullGreyGuy

Barry_Spock said:

DullGreyGuy said:

What does your contract state? 

If it says £200/day you should invoice them in GBP in line with the contract. If its to be converted the contract should state what conversion rate is used. 

If you really want to go against the contract you signed up to then just the preceeding day's spot rate which will only go in your favour if the pound tanks further against the dollar between you writing your invoice and the date they make payment. Any small movements are more likely to be more than wiped out by the currency conversion charged by your bank assuming you dont have a dollar account.

The jobs were based on project fees for each bit - so the client offered an amount per design I produced which i agreed (in dollars).

Sorry, I totally misread your original message.

https://www.halifax.co.uk/bankaccounts/help-guidance/online-banking-help/international-payments/receiving-a-payment.html

Above is your bank's guidance, so £7 per transaction fee plus 3.55% margin on the exchange rate

You could open a Wise account to receive the funds, if they use an ACH transfer then there is no fee for receiving the monies, $4 if they wire it instead. They use a live exchange rate with a 0.42% margin and a fixed fee of circa 50p

Barry_Spock

DullGreyGuy said:

Barry_Spock said:

DullGreyGuy said:

What does your contract state? 

If it says £200/day you should invoice them in GBP in line with the contract. If its to be converted the contract should state what conversion rate is used. 

If you really want to go against the contract you signed up to then just the preceeding day's spot rate which will only go in your favour if the pound tanks further against the dollar between you writing your invoice and the date they make payment. Any small movements are more likely to be more than wiped out by the currency conversion charged by your bank assuming you dont have a dollar account.

The jobs were based on project fees for each bit - so the client offered an amount per design I produced which i agreed (in dollars).

Sorry, I totally misread your original message.

https://www.halifax.co.uk/bankaccounts/help-guidance/online-banking-help/international-payments/receiving-a-payment.html

Above is your bank's guidance, so £7 per transaction fee plus 3.55% margin on the exchange rate

You could open a Wise account to receive the funds, if they use an ACH transfer then there is no fee for receiving the monies, $4 if they wire it instead. They use a live exchange rate with a 0.42% margin and a fixed fee of circa 50p

Just looked into Wise - sounds much better than my bank. Are they seen as the best for receiving foreign currency? 

Can i use them like my normal bank (current account)?

DullGreyGuy

Barry_Spock said:

DullGreyGuy said:

Barry_Spock said:

DullGreyGuy said:

What does your contract state? 

If it says £200/day you should invoice them in GBP in line with the contract. If its to be converted the contract should state what conversion rate is used. 

If you really want to go against the contract you signed up to then just the preceeding day's spot rate which will only go in your favour if the pound tanks further against the dollar between you writing your invoice and the date they make payment. Any small movements are more likely to be more than wiped out by the currency conversion charged by your bank assuming you dont have a dollar account.

The jobs were based on project fees for each bit - so the client offered an amount per design I produced which i agreed (in dollars).

Sorry, I totally misread your original message.

https://www.halifax.co.uk/bankaccounts/help-guidance/online-banking-help/international-payments/receiving-a-payment.html

Above is your bank's guidance, so £7 per transaction fee plus 3.55% margin on the exchange rate

You could open a Wise account to receive the funds, if they use an ACH transfer then there is no fee for receiving the monies, $4 if they wire it instead. They use a live exchange rate with a 0.42% margin and a fixed fee of circa 50p

Just looked into Wise - sounds much better than my bank. Are they seen as the best for receiving foreign currency? 

Can i use them like my normal bank (current account)?

They aren't legally a bank and so its important to remember that you dont have FSCS protection if they were to go bust whilst holding your money. They also have a very different funding model and so costs are materially different to a UK current account... international transfers are much cheaper but if you choose to get a debit card then there are fees for using it either more than twice a month or for more than £200.

Personally I use them for transfers/FX and just have the money put into by Barclays account (if not travelling) or Starling (if travelling) but I dont receive/send enough international transfers to warrant speculating on currency movements and holding funds in non-GBP currencies.

Barry_Spock

So they don't charge if I use Wise as an account for receiving my freelance funds and then transferring over to my Halifax current account?

Barry_Spock

DullGreyGuy said:

Barry_Spock said:

DullGreyGuy said:

Barry_Spock said:

DullGreyGuy said:

What does your contract state? 

If it says £200/day you should invoice them in GBP in line with the contract. If its to be converted the contract should state what conversion rate is used. 

If you really want to go against the contract you signed up to then just the preceeding day's spot rate which will only go in your favour if the pound tanks further against the dollar between you writing your invoice and the date they make payment. Any small movements are more likely to be more than wiped out by the currency conversion charged by your bank assuming you dont have a dollar account.

The jobs were based on project fees for each bit - so the client offered an amount per design I produced which i agreed (in dollars).

Sorry, I totally misread your original message.

https://www.halifax.co.uk/bankaccounts/help-guidance/online-banking-help/international-payments/receiving-a-payment.html

Above is your bank's guidance, so £7 per transaction fee plus 3.55% margin on the exchange rate

You could open a Wise account to receive the funds, if they use an ACH transfer then there is no fee for receiving the monies, $4 if they wire it instead. They use a live exchange rate with a 0.42% margin and a fixed fee of circa 50p

Just looked into Wise - sounds much better than my bank. Are they seen as the best for receiving foreign currency? 

Can i use them like my normal bank (current account)?

They aren't legally a bank and so its important to remember that you dont have FSCS protection if they were to go bust whilst holding your money. They also have a very different funding model and so costs are materially different to a UK current account... international transfers are much cheaper but if you choose to get a debit card then there are fees for using it either more than twice a month or for more than £200.

Personally I use them for transfers/FX and just have the money put into by Barclays account (if not travelling) or Starling (if travelling) but I dont receive/send enough international transfers to warrant speculating on currency movements and holding funds in non-GBP currencies.

Do i open a Wise account set to GBP pounds for the US money to convert or do i set it up as US dollars?

Barry_Spock

My client has just asked about a W8 form. I wasn't aware of this. Does anyone know what i should be filling in and why i need to do it? Thanks.

DullGreyGuy

W8 is a collection of IRS forms used by foreign individuals/entities to validate they are not US based for certain income classes which are being earned in the US. Failure to complete it may result in 30% of monies being withheld by the IRS

tiger_eyes

My experience is a little out of date, but about a decade ago I had to call the US IRS to get an Employer Identification Number (EIN) and complete a form called the W8-BEN in order to get my book royalties from Amazon US without them withholding money for US taxes. I'm also a UK freelancer with US clients and on the rare occasions anyone asks about my tax status, the EIN and W8-BEN keeps them happy too. I think the Individual Taxpayer Identification Number (ITIN) is another acceptable alternative, but that might also require calling the IRS. I think the process was free? It wasn't as difficult as it sounds.