Three places a foreign payment loses value

Where the money actually goes

A client in another country agrees to pay you 1,000 units of their currency. What reaches your account is regularly 920 to 950, and most freelancers never work out where the rest went, because it disappears in three separate places.

The transfer fee. Visible, usually modest, sometimes charged to you and sometimes to them.

Intermediary bank charges. A traditional international wire may pass through one or two correspondent banks, each of which can deduct a fee in transit. You will not see these in advance, and the sender often does not either.

The exchange-rate margin. This is the big one and the one people miss. Banks and payment services convert at a rate worse than the real interbank mid-market rate, and keep the difference. A margin of 3% to 4% is normal for a high-street bank and is not presented as a fee at all: it is a worse number.

Compare the rate you were given against the mid-market rate for that day, which you can look up for free. The gap is what the conversion cost you.

The options

Bank wire (SWIFT). Universally accepted, reliable, slow (two to five working days) and typically the most expensive once the exchange margin is counted. Sometimes the only option, because large companies’ finance departments will pay a bank account and nothing else.

Multi-currency transfer services such as Wise or similar competitors. They convert near the mid-market rate with an explicit percentage fee, and many provide local receiving account details in several currencies. The practical effect is significant: your client makes a cheap domestic payment in their own country, and you convert once, visibly, at a good rate. For most independent creatives this is the largest single saving available and it takes an afternoon to set up.

PayPal. Convenient, widely trusted by small clients, and expensive. Cross-border commercial receipts typically carry a percentage fee plus a fixed amount, and then a further currency-conversion margin of several per cent on top. Two charges, applied in sequence. Fine for small amounts and convenience; a poor default for a business.

Payoneer and similar sit between the two, and are common where marketplaces pay out through them.

Local instant rails (UPI in India, PIX in Brazil, SEPA instant across the euro area, FPS in the UK) are effectively free and near-instant within their region. If you have clients in one of those regions and can receive locally, do.

Cryptocurrency. Occasionally proposed. It introduces price volatility between agreement and settlement, conversion costs at both ends, and tax reporting complications in most countries. Not a solution to a fee problem.

Who pays the fees

Decide this before the first invoice and write it on the invoice: all bank charges to be borne by the sender, or the amount you expect to receive net.

On a SWIFT transfer the sender chooses a fee option that determines whether charges are shared or borne entirely by them, and if nobody specifies, the default often deducts from the amount in transit. Saying so explicitly is a one-line change that recovers real money.

Tax across borders, in outline

This is the part where general advice is dangerous, because the rules depend on both countries, on any treaty between them, and on your own registration status. What follows is a map of what to ask about, not an answer.

Withholding tax. Some countries require a business paying a foreign supplier to deduct a percentage and remit it to their own tax authority. You receive less, and you receive, or should ask for, a certificate showing what was deducted. Depending on treaties, you may be able to credit that against tax at home. A client who tells you they must withhold is usually right; what you need is the certificate.

VAT, GST and sales tax. Whether you charge it on an export of services depends on your registration, the client’s status, and where the service is deemed supplied. Two things are commonly true and worth checking against your own rules: exported services are often zero-rated or outside scope, and a business client in another country frequently accounts for the tax themselves under a reverse-charge mechanism. Getting this wrong in either direction is expensive, so establish it once with an accountant in your own country.

Registration thresholds. Many countries require registration above a turnover threshold. Crossing it unnoticed creates a liability for tax you never collected.

The practical instruction: one hour with a local accountant, once, when you start taking foreign clients. It costs a small fraction of a single mistake, and the rules are specific enough that no article can substitute for it.

Quoting in which currency

If you quote in the client’s currency you carry the exchange risk between agreement and payment. Over a three-month project with a 5% move, that is 5% of your fee.

For short projects it rarely matters. For long ones, or in a period when your currency is moving, consider quoting in your own currency, or in a stable major currency, or including a clause that the figure is fixed in one named currency and conversion is the payer’s responsibility. State the currency explicitly on every document; an unqualified number in a world with several kinds of dollar is an avoidable dispute.

Getting a client’s finance department to cooperate

Large organisations have supplier onboarding: forms, tax declarations, bank verification, sometimes a portal. This can take weeks and it happens before the first payment, not after.

Start it on day one rather than at the first invoice. Ask directly in the kickoff: “What do you need from me to set me up as a supplier, and how long does that usually take?” Freelancers routinely lose a month to discovering this at invoice time, and it is entirely avoidable.

The limitation

None of this removes the underlying asymmetry: a freelancer in one country invoicing a company in another has almost no practical enforcement if things go wrong. Cross-border legal action is slow and costs more than most creative invoices are worth, which means the real protection is structural and comes earlier: a deposit, staged payments, and nothing final released before final payment clears.

Optimising the payment rails saves a few per cent, reliably, and is worth an afternoon. It does not substitute for the structure, and treating it as if it does is the mistake worth avoiding.