Which exchange rate should a freelancer use?

You invoice a client 1,000 euros. Three weeks later, 1,000 euros arrive, and the amount in your own currency is different from the day you sent the invoice. So which number is your income? The answer matters for your profit, your savings and your records.

The short answer

Record income at the exchange rate on the day the money actually reached you. That is the amount you can spend, and it is the number that reflects what you really earned.

Why not the invoice-date rate?

The invoice date is only a promise. Between sending the invoice and getting paid, the rate moves. If you record the invoice-date rate, your books show money you never received, or miss money you did.

What about fees and the bank's rate?

Banks and payment services usually apply their own rate and fees. If you know what actually landed in your account, use that figure as the truth for that payment. The market rate is a good fallback when you do not have the exact number.

A simple rule to follow

1. Pick one currency as your base for all reporting.
2. For each payment, use the rate on the payment date, or the exact amount your bank gave you.
3. Record fees separately, so you can see your net income.
4. Use the same rule every time. Consistency matters more than perfection.

A note on tax

Tax rules differ by country, and some countries require a specific rate or method. Check what applies to you or ask a qualified adviser. This article is general information, not tax advice.