How to pay invoices in a foreign currency

Here’s how to pay invoices in a foreign currency:

1. Create an account with OFX to save on all foreign currency payments and manage foreign exchange risk.
2. Log in to get a live quote for international currency transfers.
3. Collect the necessary banking information, including your recipient’s name and bank account number.
4. Set up a single transfer or Forward Contract.
5. Track your transfer(s) with the OFX mobile app.

Perhaps the greatest thing about the onset of the digital global economy is the ability to find high-quality professional services and products anywhere on earth. Whether you need to hire contractors or source competitively priced supplies from overseas, you now have the ability to get the best talent and products in the world, at the right price for your business.

Global sourcing may provide exciting and profitable opportunities for your business, but paying invoices in a foreign currency is an important process to get right. Exchange rate fluctuations can affect your margins, so it’s worth taking a closer look at how to pay international invoices in a way that protects your business from unnecessary risk. 

The benefits of paying invoices in a foreign currency

When paying foreign employees, you have two primary options: pay in your own currency, or pay in the local foreign currency. Often, you’ll save money by choosing the latter.

Some contractors charge more if you don’t make the payment in local currency, and they have to convert the currency themselves. In this scenario, your business may lose control over the exchange rate, and suppliers may build in a hefty margin that boosts their profits at your expense. To avoid this, make payments in the local currency and consider establishing terms under which the contract will be renegotiated if the exchange rate moves substantially (i.e. ‘pricing will be reevaluated if the exchange rate moves three percent or more from xx value.)

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Making foreign currency payments in USD

There are a few notable exceptions to the above guidelines, namely China and Malaysia. In countries where the local currency is heavily regulated, suppliers may prefer to be paid in U.S. dollars, so they retain more flexibility in moving their money. If your supplier is keen to receive payments in U.S. dollars, you may be able to negotiate even better pricing than if you paid in the local currency. Either way, ensure that your contract specifies which currency you’re obligated to make the payment in.

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Managing risk when paying invoices in a foreign currency

Anytime you’re making payments abroad or investing overseas, your business will be exposure to risk in the form of currency fluctuations. In today’s political climate, such fluctuations can be profound and sudden, which is why many businesses mitigate their risk by using a Forward Contract to lock in an exchange rate for up to twelve months. Doing so allows your business to keep cash flowing as projected no matter what happens in the fickle currency markets.


Another risk management tool used by professionals is an Option. An Option gives you the right, but not the obligation to transfer money at a specified rate at a given date in the future. 

If you’re concerned about how currency risk may affect your bottom line, call OFX today to speak with a dedicated specialist who can help you develop a custom currency strategy that’s right for your business.

How to pay invoices in a foreign currency with OFX

Paying invoices in a foreign currency couldn’t be simpler than with OFX.

OFX is integrated with cloud accounting software, like Xero and Saasu, to make foreign currency invoice accounting simple. 

To save money on all your international invoice payments, create an account with OFX. Once you’re ready to pay the invoice, log in to get a live quote. Then, enter the banking details for your intended recipient, including the name on the account and bank account number. We’ve done our best to simplify our online form, so you don’t have to deal with confusing foreign banking codes, but if you do have any trouble, you can contact us 24/7 to receive prompt, personal phone support.

You can set up timely recurring payments at fixed or non-fixed rates of exchange, so you can automate your international invoice payments and save time.

You can also track your transfer(s) in the OFX app and see exactly when it arrives.

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Gain greater control of your business

When you use OFX to pay invoices in a foreign currency, you instantly save money over the high street banks by getting a better exchange rate. Some banks and online marketplaces charge up to 5% per transaction for currency conversions. That’s $500 on each $10,000 payment. You’ll save every time you do payroll when you make the smart switch to OFX.

Our robust currency platform is designed around your business needs. With us, you can book in your transfers 24/7, which may help expedite your supply chain. We can also mirror your internal verification processes, so that sign off is simple even when the boss is on holiday. 

If you employ a diverse international workforce, you can offer OFX as an employee benefit as a number of Fortune 500 companies do.

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How to pay invoices in a foreign currency from the U.S.

There are certain steps you must take to comply with U.S. federal tax law when paying foreign invoices from overseas employees. Please be advised that OFX does not provide tax advice, so consult a tax professional before proceeding. The following information was found on readily accessible government tax authority websites.

If the worker you are paying is a “nonresident alien,” meaning they neither live or work in the United States, claim residency, nor are married or related to any one who does, you are not usually required to provide them with a 1099 form, nor withhold tax from them.

What you will probably need to provide is a W-8BEN form, which is used by the worker to officially declare that they do not meet the requirements to sign a W-9 form. The W-8BEN form must be retained by you, the employer, in the event that the IRS requires later explanation as to why no 1099 was filed.

How to pay invoices in a foreign currency from the U.K.

There are certain steps you must take to comply with U.K. tax law when paying  employees abroad. But again, OFX does not provide tax advice, so consult a tax professional before proceeding.

U.K. tax law requires somewhat less paperwork than U.S. law when it comes to paying foreign employees based overseas. If the employee you are paying is in no way, shape, or form a U.K. resident or citizen, a business usually only withholds tax on payments made for interest, royalties, and for live performances. Taxes must be withheld from interest payments generally at a rate of 20%. You do not need to withhold tax from traditional wage employment.

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How to pay invoices in a foreign currency from Australia

There are certain steps you must take to comply with Australian tax law when paying foreign invoices from employees based overseas. And we can’t stress this enough: OFX does not provide tax advice, so consult a tax professional before proceeding.


Much like the U.K., Australia only usually requires tax withholding on payments made to foreign workers under select circumstances. Any invoice involving work related to promoting or operating casinos in Australia, promoting or operating entertainment or sporting events in Australia, or operating construction, installation, or upgrades on buildings in Australia must have tax withheld at a 3% rate. Please note: if you do make the payment in a foreign currency, you should still report and pay your taxes to the ATO in Australian dollars.

Another thing to note is that if your foreign employee does a sufficient amount of sales “connected with Australia,” the ATO advises that they may need to apply for an Australian Business Number (ABN). If they do not have an ABN or can not provide one, you may be required to withhold tax at a rate of 49%.

If you are unsure of your own personal situation, contact the ATO for help.

With the ability to pay invoices in a foreign currency, a whole world of business opportunities opens up to you – literally! Let OFX help make your plans for world (business) domination a reality.

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IMPORTANT: The contents of this blog do not constitute financial advice and are provided for general information purposes only without taking into account the investment objectives, financial situation and particular needs of any particular person. OzForex Limited (trading as OFX) and its affiliated entities make no recommendation as to the merits of any financial strategy or product referred to in the blog. OFX makes no warranty, express or implied, concerning the suitability, completeness, quality or exactness of the information and models provided in this blog.