We’re often asked if it’s OK for a UK business to invoice in a currency other than GBP. It absolutely is, but it’s sensible to consider both whether you can *and* whether you should.
The first bit is easy. Yes, you can invoice in any currency you like! If you’re VAT-registered, the VAT amount needs to be converted to GBP and explicitly stated on your invoice, but if it’s a B2B sale you very likely won’t have to charge VAT anyway.
The second bit – should you? – is a bit more nuanced. Invoicing in someone else’s currency represents a transfer of risk from them to you. If you invoice someone in France for £3,000, then exactly how many Euros that is when the payment is due is their problem, not yours. You’re going to get £3,000 (assuming they pay you, anyway). But if you invoice them €3,500, and they make that payment to your GBP current account, then you don’t actually know how many pounds you’re going to end up with. It just depends upon exchange rates on the day payment is made. Your customer now knows exactly how much they’re going to be paying out, but you’re spinning the wheel and could do well or badly depending upon exchange rate movements.
In real life, very often you won’t have a choice – it’ll depend upon where the power lies in the relationship. If you’re working for some US tech giant, you’re going to be pitching and invoicing in USD, no doubt. But if there’s some room for negotiation, invoicing in GBP is going to give you more certainty. On the other hand, if you’re a risk-taker, perhaps you’ll prefer to spin the wheel and see how much you end up receiving!
If a UK business is doing lots of business in another currency, it might consider opening a bank account in that currency elsewhere. And we discuss that here.
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