How To Avoid Losing Money When Freelancing For International Clients

How To Avoid Losing Money When Freelancing For International Clients

Freelancing for international clients provides a broad spectrum of job opportunities that may not be as easily available locally. It’s highly possible to find jobs that pay your rates, but when it comes to billing, you might find yourself getting less than you asked for.

Your options for money management are:

Exchange rates

You’re always going to bill the client in their own currency. With fluctuating exchange rates, that’s the only way they can be sure your rates won’t suddenly skyrocket.

But when you signed up for the job, you were aware of the pitfalls of your income being tied to your currency’s value. However, it’s not only the fluctuating exchange rates that are keeping you from your hard earned money.

This happens all the time

Let’s say you’re converting pounds into dollars. At the moment, £1 gets you 1.2954 USD. So if you get payed £100, that converts to 129.5400 USD.

You wait the 5 working days for the bank to process the payment, and finally your earnings come through with $10 – $20 short. Where has that money gone??

You phone the bank to get some clarification, and they tell you 2 things:

  1. they could only get you an exchange rate of 1.1918 USD to the pound
  2. they charged you to cover the costs of the transfer

Suddenly, your pay isn’t quite meeting your actual rates.

With banks, this is par for the course

Banks are most often guilty of giving you inferior exchange rates. They promise their rates will be “competitive”, but they’re only competitive when looking at other banks.

Yes, there are fluctuations in the currency value. But there is no reason the bank cannot get you the mid-market rate that you’ll find with a quick Google search. Generally, the bad exchange rates are a way of charging hidden bank fees. It looks better than charging you exorbitant bank fees, right?

Well, they still charge hefty bank fees!

When it comes to foreign exchange, banks will always take advantage. Consumers use them because of convenience, and because they may not know better.

There is some justification to banks charging for foreign transfers. Foreign transactions carry a certain amount of risk, that must be accounted for, and doing so requires some extra charges. By using a bank, you’re choosing what is an essentially costly process. But what they take far exceeds those expenses.

Paypal & the like

Paypal is free to use – that is until you’re receiving a transfer in a foreign currency. Then there are mandatory fees depending on the sum of money, as well as the inferior exchange rate. Their fees are even heftier than those charged by the banks, in some cases.

Some of the most important fees according to their User Agreement:

Recipient’s CountrySender’s CountryFee for payment fully funded by PayPal balance or bank accountFee for payment fully or partially funded by debit card or credit card
Albania, Andorra, Austria, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland (including Aland Islands), Gibraltar, Greece, Hungary, Iceland, Ireland^, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Norway, Portugal, Romania, Russia, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, U.K. (including Channel Islands and Isle of Man).Northern Europe *


US, Canada, Europe I **


Europe II ***


All other countries

0.4%





0.5%



1.0%^



1.5%^
3.8% + Fixed Fee




3.9% + Fixed Fee


4.4% + Fixed Fee


4.9% + Fixed Fee
Belgium, France, French Guiana, Guadeloupe, Italy, Martinique, Mayotte, Netherlands, Reunion.Northern Europe *


US, Canada, Europe I **


Europe II ***


All other countries

0.4%





0.5%



1.3%



1.8%
3.8% + Fixed Fee




3.9% + Fixed Fee


4.7% + Fixed Fee


5.2% + Fixed Fee
GermanyNorthern Europe *


US, Canada, Europe I **


Europe II ***


All other countries

1.8%





2.0%



3.0%



3.3%
3.7% + Fixed Fee




3.9% + Fixed Fee


4.9% + Fixed Fee


5.2% + Fixed Fee
PolandNorthern Europe *


US, Canada, Europe I **


Europe II ***


All other countries

0.9%





1.0%



1.5%



2.0%
3.8% + Fixed Fee




3.9% + Fixed Fee


4.4% + Fixed Fee


4.9% + Fixed Fee
AustraliaAnywhere1.0%3.4% + Fixed Fee
BrazilAnywhere1.0%^5.99% + Fixed Fee^
JapanAnywhere0.3%3.9% + Fixed Fee
U.S. and CanadaAnywhere1.0%3.9% + Fixed Fee
All other countriesAnywhere0.5%^3.9% + Fixed Fee^

* Northern Europe: Denmark, Faroe Islands, Finland (including Aland Islands), Greenland, Iceland, Norway, Sweden.

** Europe I: Austria, Belgium, Cyprus, Estonia, France (including French Guiana, Guadeloupe, Martinique, Reunion and Mayotte), Germany, Gibraltar, Greece, Ireland, Italy, Luxembourg, Malta, Monaco, Montenegro, Netherlands, Portugal, San Marino, Slovakia, Slovenia, Spain, United Kingdom (including Channel Islands and Isle of Man), Vatican City State.

*** Europe II: Albania, Andorra, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Georgia, Hungary, Kosovo, Latvia, Liechtenstein, Lithuania, Macedonia, Moldova, Poland, Romania, Russia, Serbia, Switzerland, Turkey, Ukraine.

But this are only the “main” fees for the personal transfers but PayPal has a lot more fees that you can see in this tables here.

Although Paypal acknowledge the “currency conversion fees” included in their exchange rates, this only gives you forewarning. You now know that your options are raising your rates or cutting your losses.

But international freelance work does not have to come at a high price.

Using Payoneer

Payoneer has been for a long time the go-to solution for freelancers all over the world because they help people send money at lower costs to more than 200 countries and in over 150 currencies. Even on their website there is a section dedicated to helping freelancers with tips and optimization tips for their budgets and transactions. But let’s take a closer look at what exactly how can Payoneer help its customers:

  1. Lower Fees – They are very transparent with their fees which are lower than many of its competitors and you can easily access from your dashboard.
  2. Withdraw Flexibility – You can get your money directly to your bank account or to your own Payoneer Prepaid MasterCard.
  3. Better Currency Exchange Rates – You get a better rate than any of your High Street banks can offer.

Payoneer banner

Using Foreign Exchange companies

Foreign Exchange companies charge the lowest prices on international transfers. They also get you the mid-market exchange rates that banks and Paypal won’t. On average, their exchange rates are 4% better than the “competitive” rates offered by banks.

Importantly, using a FX company will not negatively impact your client in any way. The amount on the invoice will be the same. They’ll transfer the exact same amount. But what you receive will be significantly more.

Taking it all into account

Using a FX company is the first step towards making the most out of your international freelance work. But it’s not the only important consideration when setting your rates. Take the following into account:

  • exchange rates will fluctuate: even though you’re getting your money at the best exchange rate, currencies have the tendency to ebb and flow. Make sure that your billing model takes changes into account, so that you’ve got contingencies for a drop in the value of your income
  • bigger is better: although it’s tempting to get paid at the end of every project, fees are lower if you wait until you’re transferring a big chunk. Ask your clients to pay you on a monthly basis, or set a specific threshold

If you want to read more about this companies, be sure to read the in-depth reviews we made for the top FX companies: