The Best Process for Exchanging Currencies!
One of the most exciting parts about being a Virtual Assistant is working with clients from all over the world! You’ll get to meet all sorts of people, take on all kinds of new and interesting jobs, and get paid in a variety of currencies.
Unfortunately, the different currencies are the only drawback to having an international business because, as you may have guessed, you’ll need to convert it into your currency before you can use it.
And that involves knowing the currency exchange rate.
The currency exchange rate can be complicated for the new VA to figure out — especially if finances aren’t their forte-and it can limit a VAs job pool. However, if you figure out how to make the exchange rate work for you, you can begin taking on international jobs like a pro!
For example, I’m a Canadian virtual assistant who has several clients in the US. Since I charge them in USD, I have to convert their payments from USD to CAD before transferring them to the bank.
As a side note, I recommend charging clients based on their location- USD for Americans, CAD for Canadians, etc.- and exchanging it on your end. That means you’ll need to know what the exchange rate is between your currency and theirs. And, trust me- figuring out the exchange rate can become a real headache- especially since the banks don’t often give the best rates.
Plus, asking the client to pay in their own, familiar currency helps cut down on the payment processing fees- which, although they may seem like an extra dollar here and there, can really add up in a year or two.
Thankfully, I’ve discovered a way to make the exchange easier on everyone involved while still getting you the most money possible!
One small disclaimer before we begin- I will be focusing on the USD/CAD exchange for my examples since I have experience with it. There may also be affiliate links in the article, but they’re harmless.
Step One: Open an account
You need a bank account before you can bill your clients and receive payments, and there are two ways you can open one.
- A: Open a USD account with your Canadian bank. I recommend a business account with RBC because they’re the best option for a USD account. Plus, their fees are minimal and allow access to AC transfers and other cool perks.
- B: Open a business account on Wise. Wise is a banking website that allows your business to go global without the hassle of dealing with a bank. As with all exchanges, there is a processing fee, but the account creation is free, and it can work with over 50 currencies! Plus, their real-time rates mean you’re always getting the best price for your money.
Step Two: Connect your bank to a payment app.
Technically, this step is optional, but I included it in case you wanted some extra support.
Once you have your bank account set up (or your Wise account), you can connect it to a payment app. I like using Stripe, but you can use whichever app you prefer- as long as you understand their risks. For example, PayPal may seem like a good option, but they charge more fees, so it’s beneficial to do some research before you decide.
Now, when you send an invoice, the client’s payment will be automatically exchanged and deposited into your bank. Easy-peasy!
Step Three: Transfer your Money.
If you opted to skip step 2, you’re going to need a way to transfer money into your bank account.
Here’s where Wise.com comes back into play. Create a free account (if you haven’t already) and link your USD and CAD bank accounts to it. Then, select how much money you’d like to transfer, check the exchange rate, and hit send!
I want to mention that the exchange rate may not be competitive with your bank, but you can always check. Just keep in mind that the slightly higher rate for Wise lets you get your money within 8–24 hours, as opposed to waiting 3–4 business days when transferring through the bank. Which, if you don’t need the money immediately, may not be a problem. It just depends on how much you’re willing to spend (or wait) on your payments.
Step Four: Track your accounts.
Here’s where it gets a little tricky. For accounting purposes, you have to track everything in your currency. Since I’m in Canada, I have to track everything in CAD. It doesn’t matter that the client paid my invoice in USD- I still have to record it as CAD.
Not only that, but you have to track the discrepancies as well. For example, if I charge 1,000 USD for a job, the exchange rate means I’ll get about 1,270.74 CAD after payment. That’s almost 300 extra dollars I have to account for in my records.
Tracking your accounts is essential in making sure you’re getting the best deals available, and you can monitor these changes through your bank or Wise account. Or, if you have the budget for it, you can hire an accountant or financial advisor to track it for you!
So, to recap, you’ll want to:
- Open a USD bank account (or Wise account)
- Connect it to a payment app like Stripe (Optional)
- Connect your account to Wise for easy transfers
- Track your accounts in YOUR currencies
The currency exchange rate can be a tricky, complicated thing if you’re new to the world of currencies, but it doesn’t have to scare you away from the potential of international clients! I love my non-Canadian clients (as well as my local ones!), and I’m glad I figured out a way to make the currency exchange as easy and seamless as possible! Otherwise, who knows what kind of jobs or opportunities I’d miss out on because they couldn’t pay me in CAD!
Don’t make that mistake! Use my experience and become the international VA you’ve always wanted to be!