The gap between "amount invoiced" and "amount received" is not random. It is the compound product of correspondent bank fee chains, FX spread extraction, and withholding tax obligations that neither party understood at the contract stage.
International Payment Rails
When a client sends a wire, money does not travel directly from bank A to bank B. It traverses a correspondent banking chain. Each institution in this chain may deduct a handling fee from the payment principal before passing it on.
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SEPA Integration
The Single Euro Payments Area (SEPA) simplifies euro transfers across 36 countries. SCT Inst (Instant Credit Transfer) is now the standard for eurozone transactions, offering near-instant settlement.
Withholding Tax
Several countries require the payer to deduct a percentage (WHT/TDS) at source and remit it directly to the tax authority. This is not a loss; it is a foreign tax credit you can claim on your domestic return.
Legal Disclaimer
This article is for informational purposes only. It is not tax or legal advice. Withholding rates and treaty rules change; verify with a qualified tax adviser. See our disclaimer.