Collecting in Foreign Currency From Israel: Rates, Fees and Invoices

An Israeli business selling in dollars or euros adds three layers to every transaction: at what rate it translates to shekels, who charges a conversion fee, and how FX differences appear in monthly reconciliation. All three are set in the agreement and in system configuration, and anyone who does not settle them in advance discovers them when the numbers refuse to line up.

Three models for receiving money from abroad

The second row is the forgotten one that is worth money: a business buying services in dollars and selling in dollars, but receiving shekels in between, pays for conversion twice on the same money.

What to ask the acquirer before enabling FX

1. Which currencies can be cleared.
2. At what rate conversion happens, and who sets it.
3. What the conversion fee is, and whether it is on top of the transaction fee.
4. Whether you can receive a deposit in the original currency, and into which account.
5. Whether settlement timing differs for FX transactions.
6. What a refund on an FX transaction looks like when the rate has moved.

The sixth question is what produces arguments with customers: a full refund in dollars can be a different amount in shekels, so decide in advance what is promised to the customer - the dollar amount or the shekel amount.

What the document needs to show

• The currency clearly beside every amount, not relying on a symbol alone.
• The rate and date used for the shekel amount, if the document shows shekels too.
• A shekel amount for the books, even when the customer sees dollars.
• A document in a language the customer reads, with a Hebrew record for bookkeeping - exactly the combination EZcount presents.
• A pointer to the refund policy, because an FX refund raises the extra question of rate.

The second item sounds formal and is what lets you explain FX differences at year end without reconstructing what happened on each transaction.

Where do the FX differences come from?

FX differences are not an error - they result from things happening on different days:

• Between the document date and the charge date, where there is a gap.
• Between the charge date and the conversion date at the acquirer.
• Between conversion and the deposit into the account.
• On a refund, executed at a different rate from the original.

So reconciliation for a business selling in FX almost always produces a differences line, and that is fine. What is not fine is having no way to explain it - which is why the report must show the original amount, the rate and the shekel amount.

What changes in monthly reconciliation

• Match by batch within a currency, never mixing currencies in one row.
• Add a column for the rate and for the original amount.
• Expect an FX differences line and do not treat it as an error.
• Check the conversion fee appears separately from the transaction fee. If not, ask the provider.

The method itself is the same one described in reconciling card settlements without an ERP, with two extra columns.

Common mistakes

• Pricing in dollars and forgetting the fee. A price set at a convenient rate shrinks after conversion and fees.
• Promising a customer a "full" refund without naming a currency. On a refund, dollars versus shekels is an argument.
• Using a rate from some website instead of the rate the provider actually uses.
• Mixing currencies in one spreadsheet with no currency column. A mistake found late and hard to unpick.
• Not checking whether the bank also charges a conversion or incoming transfer fee.

When an FX account is worth opening

• When there are regular costs in that currency - suppliers, advertising, cloud services.
• When FX sales volume justifies the cost of running the account.
• When volatility is significant and you want to choose when to convert.
• When customers ask to transfer directly, rather than only to be charged.

In every other case, automatic conversion to shekels is simpler and easier to reconcile.

What about VAT on a sale abroad

This confuses businesses starting to sell outward, and it consists of two separate things: how the transaction is presented on the document, and the periodic report. Israeli systems handle it in different ways - EZcount, for instance, explicitly presents VAT-free invoices alongside foreign currency support.

What matters operationally: making sure the system can issue the right document type, that it retains the supporting records, and that the periodic report shows these transactions separately. What applies to your business specifically is a question for your accountant - this is an operational description, not tax advice.

How to price correctly when selling in a foreign currency

A dollar price should be set after accounting for three deductions rather than one: the transaction fee, the conversion fee, and sometimes an incoming bank fee. A business that translates its shekel price at today's rate and publishes it finds it receives less than planned, and in a season when the rate moves that becomes significant. The simple approach: calculate backwards from the amount you want to see in the bank, rather than forwards from the price you want to display.

What to test before you sell abroad

Before the first FX transaction, run one small end-to-end test: issue a document in the foreign currency, charge a small real amount, see what actually lands in the bank, and refund it. Those four actions expose at once the rate the provider uses, the fees you did not know about, and how refunds behave - the three things no price list will tell you.

Sources

• Bank of Israel - exchange rates and payment systems
• EZcount - foreign currency and English documents with Hebrew records
• Shva - the Israeli card clearing infrastructure