Currency is a type of monetary unit. Some countries have their own currency, while others use a shared one.
The United States uses the United States dollar—usually abbreviated as $ or USD—while England uses British pounds, which is abbreviated as £ or GBP.
However, there is no rule to say that different countries need their own currency. One example of a shared currency is the euro, which is used by 20 countries in Europe.
When do we use the term currency?
The term is often used when we discuss different types of monetary units, for example when invoicing across borders.
In that case, you want to know the currency’s value relative to other currencies. This evaluation is known as the exchange rate, and is how value is determined across different currencies.
What is an exchange rate?
The exchange rate is the value of a currency when it’s traded for another currency. One example is trading from pounds to dollars. On January 1st 2025, the exchange rate was 1.25. That meant 1 pound could be exchanged for 1.25 dollars.
How strong or weak a currency is impacts the country’s trade, tourism and import prices. If the pound gets weaker—for example if the exchange rate in the example above was reduced to 1— it would be more expensive for British people to visit other countries, trade with other countries, or buy foreign products online.
Should you invoice in several currencies?
Many clients will appreciate being invoiced in their own currency. If you use invoicing software, you can usually invoice in several currencies, but make sure to check the exchange rate so that you’re not losing money by invoicing in other currencies.
Some people will also choose to invoice in USD across borders, even though neither they nor the client uses USD in their country. This is to standardise prices, offer more transparency to clients and to make invoicing easier for their own business.
