Invoicing a dollar-priced trip in local currency
How an agency invoices a trip its suppliers price in US dollars when its invoices are in rand, naira or shillings, and what to do when the rate moves.
By Achekam · · 4 min read · For Travel businesses in South Africa, Nigeria, Kenya
Much of what a travel agency sells is priced in US dollars before it reaches the client. International airfares, safari lodges, cruise lines, overseas hotels and many regional ground handlers quote in dollars. The client, meanwhile, expects a price in rand, naira or shillings, and pays in the same.
Somewhere between the supplier's dollar price and the client's local payment sits an exchange rate, and exchange rates move. An agency that does not decide in advance whose problem that movement is will absorb it, quietly, on trip after trip. This article sets out how to invoice dollar-priced trips in Achekam, choose and state the rate, and handle the differences when the rate moves.
Pricing in dollars, invoicing in your own currency
At the time of writing, neither of Achekam's invoice forms lets a business invoice in another currency. A South African agency invoices in rand, a Nigerian agency in naira and a Kenyan agency in shillings, whatever currency the supplier quoted.
That is not a problem in itself; most local clients want a local-currency invoice. It does mean the conversion happens before the invoice exists, and the rate you choose is baked into every line. A draft invoice can be changed or deleted, but issuing it takes the next number in your sequence and posts debtors, sales and output VAT at the amounts on it. From that moment, a change in the rate does not change the invoice.
Choosing the rate and stating it on the invoice
Choose your rate deliberately and use the same source every time:
- Your bank's selling rate for dollars on the day, which is close to what you will actually pay the supplier.
- An official reference rate, plus a margin you set to cover movement and bank costs. In Nigeria, for example, the CBN publishes the daily official naira to US dollar rate from the Nigerian Foreign Exchange Market.
- A rate fixed in the quote and held for a stated number of days.
Whichever you use, state it on the invoice. A line description such as "Lodge accommodation, priced by supplier in US dollars, converted at the stated rate on the invoice date" tells the client how the figure was reached and makes later conversations easier. Keep a note of the source and the rate with the booking.
When the rate moves before the client pays
A worked example in words. You quote and invoice a lodge stay in shillings at today's rate, due in 30 days, the default terms. The client pays near the due date. Meanwhile the shilling has weakened, and when you buy dollars to pay the lodge, the trip costs you more in shillings than the invoice brought in.
You have three options, and your terms decide which are open to you:
- Absorb the difference. It becomes a cost of the trip. Fine for small movements if your margin allows it.
- Invoice the difference. If your terms say the price is subject to the rate at payment, issue a separate invoice for the top-up, with the old and new rates explained. It can carry its own pay link.
- Re-quote before invoicing. For bookings far in advance, issue a deposit invoice now and invoice the balance at the rate on the balance date.
If the rate moves the other way and you choose to pass a saving back, a credit note is issued from the original invoice, in full or for chosen lines. Because it works line by line, it suits a change to what was sold better than a small currency adjustment; for a price reduction, credit the affected line and invoice it again at the new amount. When a price or date changes after you invoiced covers that sequence in full.
Small differences: part payment, credit note or write-off
Clients sometimes do their own conversion and pay a little less than the invoice, or bank charges eat into what arrives. A business records customer payments against one invoice or across several, and a part payment leaves the invoice part-paid with the balance still owed.
Then decide what to do with the small balance:
- Chase it, if it is worth chasing, with a statement showing what is still owed.
- Write it off. An unpaid debt can be written off once a partner approves. Set a small-balance threshold in your policy so these do not each need a debate.
- Leave it, temporarily, if the client is about to book again and you will settle it then. Receivables are aged into 0-30, 31-60, 61-90, 91-120 and over 120 days, so a forgotten small balance will show up in the age analysis.
Short payments caused by foreign bank charges have their own pattern; see foreign agent payments that arrive short by bank charges.
Terms that say who carries the rate risk
The real fix is in your booking terms, not in your books. Decide, and write down:
- whether quoted prices are fixed in local currency, or subject to the rate on a stated date;
- how long a quote's rate is held;
- whether a top-up is invoiced if the rate moves beyond a set margin before payment, and whether a saving is passed back;
- which rate source you use.
If you hold dollars to pay suppliers, running a US dollar account beside your local account explains how that account sits in your books and what to agree with your accountant on exchange differences.
Before the next dollar quote goes out
Pick one rate source, write the rate-risk clause into your booking terms, and add the rate statement to your invoice line descriptions. Then check last month's dollar-priced trips: how much did rate movements cost you? That figure tells you how much margin your rate needs.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
