As the demand for cross-border legal advice continues to increase, so does the need for handling cross-border billing as well as making cross-border payments.

But what might seem like a straightforward process—such as receiving all payments in a single currency—becomes much more complex during a period of currency fluctuations, making bottom-line revenue estimations less than certain. We will examine the challenges as well as the various solutions that have been adopted as best practices in international billing.

Invoicing in Stable Currencies

There may appear to be an advantage in merely invoicing all clients in U.S. Dollars (USD), given the fact that your firm is likely headquartered in the U.S., recognizes expenses in USD, and has as its basic rate of taxation the U.S. tax regime. However, as of mid-2022, rather surprisingly, the USD ranked only number 7 in terms of stability against fluctuation, outranked by the Swiss Franc (CHF) in the first place, the Japanese Yen, Norwegian Krone, Swedish Krona, European Euro (#5), and even the Singapore Dollar. Although invoicing only in USD eliminates the risk of foreign exchange rate fluctuation, firms must consider what happens when valued overseas clients either prefer—or insist on—remitting payment in their own currency. Suddenly, things get complicated.

One method of hedging against foreign exchange currency fluctuations is by obtaining from your bank a Forward Exchange Contract (‘Forward Cover’), which locks in the current, known exchange rate so that your firm will not suffer a loss while awaiting payment, in the event that the exchange rate makes a move that is not in your favor.

Re-billing and Write-offs

The aforementioned financial loss from foreign currency exchange fluctuations has led some law firms to either re-bill overseas clients (also known as a ‘true up’) or take a write-off on the rate difference. Smaller, boutique firms may opt to re-bill overseas clients—despite the stigma of this being perhaps professionally ‘awkward’—while major firms have—until now—simply chosen to write off the loss incurred in billing major clients since it can be negligible in the scope of their otherwise impressive profit margins: a USD to Pound Sterling rate fluctuation may only result in a $125 difference on a $10,000 invoice, relatively insignificant on its face. But when extrapolated out to thousands of invoices, the gap can become significant, and, as the larger firms find an increasing amount of their bottom line coming from overseas clients, the previously acceptable write-off option is becoming less sustainable. Accordingly, many organizations incorporate rebill provisions in their agreements in an effort to stem the impact of what may turn out to be widely swinging currency fluctuations.

Not Just Receivables

Foreign currency exchange rate fluctuations must also be considered as they pertain to a firm’s expenses. Whether for miscellaneous overseas associates’ expenses, travel costs, or any other foreign financial transactions, the volatility in the exchange rate can make for a very unpredictable cost-of-doing-business expense trajectory.

Front-end and Back-end Providers

B2B cross-border payment transactions have typically used solutions that involve front-end and back-end providers. The payer would normally select a front-end provider (whether a bank, mobile app or business credit portal) to process the payment. The law firm would receive the proceeds of the transaction after being transferred through the provider that the payer has chosen. One problem with that scenario is settlement periods that does not occur in real-time, and, in addition, transaction costs have been rather high.

To address these and other problems, Fintech technologies have been developed to optimize cross-border payments and enable more streamlined interoperability between the invoicing firm and the overseas remitting client. With back-end-focused solutions, the parties have more options available that increase efficiency in completing the payment process. Traditional financial institutions are being forced to adapt their own, often outdated, money transfer mechanisms to the newer technologies in order to stay competitive with Fintech challenger banks and applications.

EU, VAT, and International Billing

In many countries, VAT is charged on professional services and not just on the sale of goods and it is, therefore, critical to know what taxes and fees may be assessed on the services you provide to your clients. For example, law firms purchasing from EU member states or invoicing to those states will have to account for international VAT. Failure to include VAT on an invoice when required can lead to serious liability consequences.

Invoices for services provided outside the EU may qualify for ‘zero rate’ VAT, and when vending services from your EU office to a foreign customer who is VAT-registered, your invoice would not list VAT, rather the VAT-registered client would pay the tax in their own country. However, there are various factors that affect the calculation of VAT and other international fees, and it is, therefore, important to work with reliable tax specialists before assuming what may or may not be applicable to your billing and to your firm’s overseas payments.

Combining Lock-in with Fintech

Integration of both AP and AR with a digital platform is gaining in popularity as a way to reduce foreign exchange shortfalls and tedious and time-consuming manual rebilling. Platforms exist that allow firms to lock-in exchange rates when billing internationally. A ‘Future Payments’ feature (similar to a bank’s Forward Cover) will protect the firm by keeping the exchange rate static for the duration of a billing cycle. If the USD dropped as against the client’s foreign currency remittance during a 90-day period, the firm would be protected against an unfavorable drop in the FX rate. Such Fintech platforms allow differing lock-in rates simultaneously to cover a variety of billing transactions.

Nothing Remains Static

Even among the ‘Top Five Stable Currencies’, FX rates do not remain totally static. Regardless of whether the fluctuations are daily or less often, wildly swinging or slightly incremental, these dips and swings will inevitably result in one of two outcomes: either the firm will suffer a financial loss, or the firm will have become enriched at the client’s expense. Neither of those end results is the least bit desirable in the world of attorney-client professional relations. By making use of the advanced technology that is available and emerging, the classic legal doctrine of ‘benefit of the bargain’ can be maintained for both parties.

Executive Summary

The Issue

How to handle the issue of foreign currency fluctuations when invoicing overseas clients.

The Gravamen

Predictability both as to revenues as well as expenses is essential for the success of any business model, including that of law firms.

The Path Forward

Utilizing Fintech resources with exchange-rate protection features can avoid unnecessary and unpleasant re-bill or write-off scenarios.


1. Assessing ‘Negligibility’:

Make a realistic assessment of what percentage of your firm’s revenues come from overseas invoicing before you invest in FX fluctuation solutions.

2. AR and AP Predictability:

If your overseas operations are expanding, both as to invoicing and being liable for foreign managerial and operational expenses, then it is time to take a close look at how upsets to AR and AP predictions might adversely impact your bottom line.

3. Unfamiliar Exposures:

VAT and other international fees vary widely from jurisdiction to jurisdiction, while at the same time, opportunities for ‘zero rate’ exist; work with a financial and accounting specialist to understand what must be included in your overseas invoices.

4. Fluctuation Protection:

Once you have determined that FX fluctuations can indeed have significant consequences for your firm’s financial health, consider the many Fintech options that exist and what features will best protect your interests.

Further Reading:


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