So you run a Canadian business, but the majority of your customers are in the United States. As used to Canadian currency as you are, you really need to consider billing your American clients in USD.
You might ask, why would I do that?
There are two simple answers: to make your US customers happy and to make more money.
Why should I care?
The US and Canadian dollar has reached parity at different points in history. But traditionally speaking, the US dollar, has been the stronger of the two currencies. For every US dollar, you spend using your CAD dollar, you’re spending more.
Bearing this in mind, there are also a handful of other business reasons why Canadian businesses should consider invoicing in US dollars.
Here are some of the top reasons why you should (if you don’t already).
Maximize your exchange rate
Let’s expands on the introduction.
When you get paid in USD, you get the benefit of enjoying a strong US dollar. You can watch the market, and do the exchange when it makes the most sense for you. If you work it just right, you can actually make money—just by being smart with your revenue.
Pocketing US dollars on hand isn’t a bad thing either. Think about this: if you’re receiving USD and waiting for the best exchange rate, that means you’ll have US funds on hand to pay any US vendors or suppliers you might be using. You’ll then be saving multiple exchange fees because you’re not exchanging from USD to CAD, and then back to USD just to pay those suppliers.
Lower fees on transactions = a better bottom line.
Easier reviews for your clients — and they’ll thank you for it
Did you know that just by invoicing in USD, you’re doing your American customers a favor? It’s actually easier for your customers to see the outstanding amount in their own currency when they open your invoices.
That’s because they can see exactly what they owe at-a-glance. They don’t have to think about exchange rates, go through the hassle of digging up their calculators, and actually doing the conversion. It’s a win-win for everyone!
Give your customers what they already expect
Imagine this: if you charge your US client $300 for a service that you provided, chances are, they’re going to review the invoice in their native currency. We’re literally wired to think in the currency where we live. Why would they automatically assume that it’s $300 CAD instead of $300 US?
You’re also operating at a loss if you stick to Canadian currency, and your US clients may even get confused at first. Give them what they already expect, and your invoicing process will be much more seamless.
Evade foreign currency fees
One thing to consider is that some US banks actually charge a foreign currency fee. When you bill them in a currency that’s not in US dollars, chances are, they’re actually losing a bit of the profit that they otherwise would have pocketed.
Nobody likes extra fees—not even your customers!
Just the very fact that these fees exist (even if the cost is minimal) leaves some customers with a bad taste in their mouths after paying. Wouldn’t it be great if you and your customers could avoid all of that?
So, how do I get started?
Before you actually go and open a USD bank account and start billing in USD, here are a few things you might want to consider so that you can make the best decision for your business.
1. How much does my business actually process in USD?
If most of your payments are in CAD, you can save a lot of cash by having somebody else handle the conversion for you. Plus, keeping your accounts in CAD keeps things simple for your growing business which mostly services Canadian clients anyways.
This is a great option because you can ensure that your customers can pay in their local currency. At the same time, you save yourself the headache and cost of dealing with multiple accounts.
If, however, you’re processing a significant amount of transactions in USD, it might be best to consider getting accounts that process USD directly. By keeping the funds in USD, you can control when the exchange happens. Then you’ll be the master of your domain and can even make a little extra revenue as a bonus.
2. How do your customers want to pay your invoices?
If the majority of your customers in the US are paying by credit card, it probably makes sense to use a merchant service provider that offers “direct processing” in USD.
You can then have the power to choose whether or not you want the provider to convert to CAD for you or to deposit the funds directly to your USD bank account. Keeping it in USD, however, will avoid multiple conversion fees.
If, on the other hand, your US customers love to pay with cash or a cheque, you should seriously consider getting a USD bank account. It will save you a huge headache and more than a few stressful moments.
3. How do I get my money converted back to CAD?
In this market, you should use a provider that is competitive and is working for you. They should be offering great rates, willing to be flexible according to your needs, and should have options that allow your transactions to be entirely electronic. The good news is, you have some great options outside of the big banks. Check around where you live for currency exchange specialists that offer competitive rates to businesses.
Once you have your provider in place, you can then pick the time that’s right for you to convert back to CAD.
Think: when would you need the cash and what’s the current exchange rate?
How TrulySmall improves invoicing
Every small business is different. You could just be starting out and landed your first USD client. Or, you could have a large US client base as you continue to scale up in that market. Wherever you are in the spectrum, you should choose an invoicing tool that works for you. After all, every business’s accounting needs are different!
All TrulySmall tools give you the option to choose to invoice in a currency that makes the most sense for you. If an intuitive double-entry bookkeeping system is what you need, then TrulySmall Accounting is your best bet. You not only have access to invoicing in the app (including managing cash flow in USD), but you also have access to other bookkeeping elements like expenses, reporting, and dashboards for a birds-eye view of your financials.
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As a truly small business owner, you might be thinking: well, I need to invoice and get paid. Right now, I don’t need to see dashboards or review my chart of accounts. In this case, invoicing with TrulySmall Invoices might make more sense. Like our double-entry accounting system, you can also toggle between US and CAD currencies (and so many others) as you draft your invoice. The entire process takes a few seconds on your end and your US client will appreciate it too.
When you sign in to our web app you can specify the currency for a given invoice you are planning to send to your US client. You have the power to choose whatever’s best for the client and circumstance. You can then save time by universally setting the currency you want to use for your US-based customers instead of on a case-by-case basis.
By using Kashoo Classic’s in-app payment processing feature, in partnership with BluePay, you can give your customers the opportunity to pay using their credit card directly from their electronic invoice.
As an added bonus, when you go through the signup process for a merchant account with BluePay, you can get one account in CAD and one in USD. That way, Kashoo actually handles the complexity of exchange rates for you so you can always see your up-to-date financial records in Canadian dollars, while at the same time having access to the transaction records in the original currency too.
Start a Free Trial Today
Whichever tool you’re looking for, TrulySmall has something that works for you and your business size, especially when it comes to invoicing in USD. Sign up for our free 14-day free trial today and send your first invoice, or send a quick free invoice with this simple tool!