How to Invoice a US Client from Canada

Technological evolution has expanded freelancers' and entrepreneurs' reach by allowing them to deal with international clients. Today, it is normal for Canadian businesses and freelancers to offer their products and services to the US market. Is this also true for you?

The Invoice

If you are in Canada offering services and products to clients in the US, chances are you are familiar with an invoice. An invoice is a document a seller gives to their buyers or clients to collect payment. This document states the products purchased or services rendered to the buyer. It can also be a legal document if it contains the seller's name, the client's description and price of goods or services, and the payment terms.

A seller or freelancer must deliver an invoice to demand payments. Aside from this, here are other benefits of using invoices:

It offers legal protection. An invoice is legal proof that the buyer and the seller agreed on a set price in exchange for products and services. It protects the seller from fraudulent lawsuits.

It helps maintain records. When you give an invoice to your clients, you can keep legal records of your sales. With this, you will know when your service or product was sold, who bought it, and who sold it.

It is an essential tool for accounting and helps you track your payments. With this, both the seller and the buyer can keep track of their payments and amounts owed.

It makes tax filing easier. When you record and maintain your sales invoices, you can report their income and be sure that you have paid the proper tax amount.

It helps in your business analytics. Analyzing your invoice can help you as a seller gather more information about your customer, the trends, popular products, peak buying times, and others. Once you’ve discovered the pattern, it will be easy for you to develop effective marketing strategies to help your business.

The Perks of Invoicing Your US Clients in USD

Canadians with US clients sometimes prefer billing their customers in the US in USD. Doing so makes their US customers happy, and the seller in Canada earns more money. Let’s elaborate on these.

Your customers will be happy. When you bill your customers in USD, it will be easier for them to see how much they should pay you in their currency at a glance without computing the exchange rates.

Your customers will save from foreign currency fees. US banks charge foreign currency fees. So, when you bill them in CAD instead of USD, they will lose a bit of profit because of paying for those extra fees to the bank when they pay you.

You maximize your profit. When you get paid in USD, you can enjoy more profit because you can enjoy a higher currency exchange rate when you convert your USD to CAD. If you are receiving USD and waiting for the best exchange rate, it means you have USD funds on hand you can use to pay any US vendors or suppliers without spending on multiple currency exchange fees.

The Process of Invoicing US Clients

Here are the steps you can take to invoice a US client from Canada:

Step 1: Define the Terms of Payment

When doing an international client invoice, you should agree to the payment terms. You should clearly define the terms in the initial contract so that both of you agree when executing the transaction. It will also help avoid confusion and minimize financial risk.

Step 2: Understand the Exchange Rate

If you wish to be paid in USD, it is important to know the USD to the CAD exchange rate to know the equivalent amount you will receive in CAD. Moreover, if you wish to be paid in USD, you may also incorporate the fee and charges involved in currency exchange transactions.

Step 3: Choose the Medium

There are many ways to receive payments from the US to Canada. Choose the best one that is convenient and practical for you. You can also set up a USD or multi-currency account in Canada. Note that the medium is primarily based on the structure and nature of your business.

Here are some options to consider if you want to get paid from overseas:

• International wire transfers
• PayPal account
• Establish a bank account in a foreign currency
• Invoicing from cloud accounting software

Step 4: Determine the Schedule of When to Invoice

Once you have determined the currency you want to be paid and how the money will be transferred to you, you and your client should agree on the payment schedule. Your contract should include the payment schedule and state when you will receive the payment. Often, requesting payment after you have delivered your products or services is ideal. When you have a pre-defined schedule for payment, your client can also arrange their finances beforehand.

Step 5: Know the Tax Implications

As a Canadian business owner, you must know the sales tax implications when selling products and services to international clients. The three main types of sales tax in Canada are:

• Goods and Services Tax (GST) - a tax imposed on the supply of products and services

• Provincial Sales Tax (PST) - a tax that is applicable when taxable products and services are bought until they are subject to a specific exemption

• Harmonized Sales Tax (HST) - a consumption tax

If you sell products and services to clients outside Canada, there is no requirement to collect PST or GST/HST if delivered to clients outside Canada. The condition is that the delivered items or services should be used outside Canada.

You must consult with your territorial or provincial revenue agency and the Canada Revenue Agency when making tax-related decisions for your business.

The Elements of an Invoice

Here are the various elements of an invoice:

1. The word INVOICE

For easy identification, the word “Invoice” and your company logo should be prominent in the document you will prepare.

2. Invoice number

Every invoice should. Have a unique identifier such as invoice number, reference number, or purchase order number. This will help in distinguishing it from your other invoices.

3. Date of Service Rendered

Take note of the date of service or date of sale.

4.. Date of Sending Invoice

To ensure that payments will be made on time, you must include the date of sending the invoice.

5. Contact and name of the seller

Your invoice should clearly show your name and contact information so your client can contact you for any queries.

6. Contact and name of buyer or client

To ensure the legality of your document, include your client’s name and contact information.

7. Terms and Conditions

This should include your business’ terms and conditions, such as the due dates, and penalties that will apply for non-payment or partial payment. These should be mentioned in the invoice.

8. A line detailing each product or service

Describe each of the products or types of service you rendered to your client.

9. Cost of product per unit

You must also indicate the price of each item or service you provide.

10. Tax rates

The taxable amount for the products or services you provided should be included.

11. The total amount owed with currency

The total amount due for payment should be indicated in the invoice.

12. A personalized note

This is optional. You may include personal notes or a customized thank you note for your client.

RemitBee: Your Partner in Exchanging USD to CAD and Vice Versa

If you wish to be paid in USD by your clients in the US while living in Canada, consider RemitBee as your trusted partner in exchanging currencies.

CAD/US conversions are free with RemitBee. Moreover, we also provide only the best exchange rates to our customers so that you can maximize your money’s potential. RemitBee is also 100% online, so you can exchange currencies with us anytime, anywhere.

Hurry! Sign up now and start exchanging currencies with us!