How to Stop Losing Money on Conversion When Clients Pay in Dollars

An agency invoiced a client for $5,000, the client paid in full — and the hryvnia account ended up with less than expected. The difference «dissolved» somewhere between the dollar account and the hryvnia one, and few people understand exactly where. It gets lost on conversion: every time you exchange currency, the bank takes its cut, and the rate has time to move. On a steady flow, these small losses add up to noticeable sums.

Let's break down exactly where you lose money on conversion when clients pay in dollars, and how to reduce those losses.

Where exactly you lose money on conversion

A conversion loss isn't a single number — it's a sum of several sources: the gap between the buy and sell rate (spread), the rate shifting while the money is «in transit», and unnecessary back-and-forth conversions. Each one looks trivial on its own, but together they eat up a meaningful share of your income, especially if you convert every incoming payment right away without thinking twice.

Loss 1. The bank's spread

A bank never exchanges currency at the «mid-market» rate. It buys dollars cheaper and sells them more expensively, and that difference (the spread) is its profit and your loss. On large amounts, even a 1–2% spread turns into thousands of hryvnias on every conversion. The first thing worth doing is finding out your real spread and comparing the terms across different banks and payment services.

Loss 2. The timing of conversion

The rate changes every day. If you convert dollars to hryvnia the moment they arrive, you accept whatever rate happens to be right now — and it may be a bad one. Sometimes it's smarter to keep part of the funds in dollars and convert them for specific hryvnia payments, rather than «all at once». But this isn't playing the exchange rate — it's management: you convert exactly as much as you need for your upcoming hryvnia expenses.

Loss 3. Double conversion

The most frustrating loss is converting dollars into hryvnia and then buying dollars again (for example, to pay a foreign contractor). You pay the spread twice for no reason. If you have both dollar income and dollar expenses, it makes sense to pay currency expenses straight from your currency account, without moving money into hryvnia and back.

How to reduce the losses

The strategy is simple. Keep a currency account and don't convert everything at once. Pay currency expenses from currency, hryvnia ones from hryvnia, and convert only the difference. Compare the spreads of banks and services and use the most favorable one for large amounts. And most importantly — track your conversion losses separately so you can see their real size: what isn't measured isn't controlled.

Example: how much conversion eats up

An agency receives $10,000 a month and immediately converts it all into hryvnia at a 1.5% spread. That's $150 in losses every month, or $1,800 a year — effectively a specialist's monthly salary, handed to the bank «invisibly». If you pay part of your dollar expenses (contractors, services) straight from currency and avoid double conversions, these losses are easily cut in half. The money is the same — it just stops leaking out on spreads.

Where to start

Calculate how much you actually lose on conversions per month (the total converted multiplied by the spread) — the figure is often unpleasantly striking. Then stop converting «everything at once» and pay currency expenses from currency. For how to set up multi-currency accounting in general, see the article An agency with EU/US clients: accounting in multiple currencies.

In Finmap you can see the movements in each currency separately and your conversion costs, so these losses finally become visible and manageable. Try it free for 7 days.