TLDR: We bill across dirhams, euros and dollars depending on the client, and for years we tracked revenue in whichever currency the invoice happened to be issued in, converted informally at whatever rate someone remembered from that week. A client payment that arrived in a currency different from the invoice, and worth noticeably less by the time it reached our account, forced us to build a proper multi-currency view of the business. The gap it exposed was bigger than the one payment that triggered it.
The invoice was issued in US dollars, as agreed in the contract, for a retainer client operating out of the Gulf. The payment that arrived was in UAE dirhams, converted at the client's bank on their end rather than ours, at a rate that shaved a real percentage off what we had booked as expected revenue. Nobody had done anything dishonest. The client's finance team had simply processed the payment the way they process every outgoing wire, in their own local currency, and the contract had never specified which side absorbed the conversion.
I noticed the shortfall because I happened to reconcile that invoice manually. I do not reconcile every invoice manually, and neither does anyone else on our small finance function, which meant I had no idea how many similar shortfalls had already passed through the books quietly, absorbed into a "bank fees" line that nobody had ever broken down by currency.
Why We Had Never Looked at This Properly
We bill clients in Moroccan dirhams, euros, UAE dirhams and US dollars, depending on where the client sits, and for most of the agency's history that felt like a detail of invoicing rather than a source of financial risk. We tracked revenue in whichever currency the invoice was denominated in, and converted to a single reporting currency at the end of the month using whatever exchange rate happened to be current on the day someone updated the sheet.
That approach hides two separate problems. The first is timing risk: a rate that moves between the invoice date and the payment date changes what the invoice is actually worth, and a month-end conversion snapshot never captures that movement. The second is the one the misdirected dirham payment exposed directly, which is settlement risk: nothing in most of our contracts specified which party bears the cost when a payment does not arrive in the currency it was billed in.
Corporate Finance Institute's overview of foreign exchange risk lays out exactly these categories, and reading it after the fact was an uncomfortable exercise, because every category it named was one we had been carrying without naming it ourselves.
What the Real Exposure Looked Like
We went back through a year of invoices and tagged each one by billing currency, then compared the booked value at invoice date against the value actually received at settlement date, using the real bank record rather than the informal month-end rate. The gap was not enormous on any single invoice. Across a year, added up, it was a number large enough that it would have changed a hiring decision if we had known about it in real time.
- Dollar-denominated invoices to Gulf clients: the most exposed category, because the client's own banking habits determined the settlement currency more often than the contract did.
- Euro-denominated invoices to French clients: the most stable category, with settlement almost always matching the invoice currency exactly.
- Dirham invoices within Morocco: no currency exposure at all, but the category most often used, without discussion, as the reference point for "normal," which is part of why the exposure on the other two categories went unnoticed for so long.
JPMorgan Chase Institute's research on cash flows and buffer days measures a related blind spot at small businesses generally: how little visibility most firms have into the actual cash arriving against the cash they believe is coming. Our currency gap was a specific version of that same general problem.
What We Changed
Every new contract now names the settlement currency explicitly, and states plainly that a payment arriving in a different currency is converted at the rate on the settlement date, with any shortfall invoiced as a correction rather than absorbed silently. That single clause would have prevented the incident that started this.
We also added a currency-exposure line to our monthly finance review, tracked separately from the headline revenue number, so a shortfall like the one we found shows up the month it happens rather than a year later during an audit nobody had scheduled. It is a small addition to a small finance function's workload, and it is the difference between a risk we manage and one we discover by accident.
What to Check in Your Own Books
If you invoice clients in more than one currency, pull last year's invoices and compare booked value at invoice date against the actual amount that landed in your account. If your contracts do not name a settlement currency explicitly, they are silent on exactly the point that determines who absorbs a currency swing, and silence in a contract usually resolves in favour of whoever is less careful, which should never be you by default. Any digital marketing agency billing across borders should run this check once a year, and we now run it every January before the new year's contracts go out.