Plan Overseas Supplier Payments as Exchange Rates Move

Check which way the exchange rate is quoted

An AUD/USD rate of 0.65 means one Australian dollar buys US$0.65. To work out the AUD needed for a USD bill, divide the USD amount by that rate. If the quote instead says AUD per USD, multiply by it. Label the units in the worksheet so nobody reverses the calculation.

The Reserve Bank's exchange-rate overview explains both quotation directions. Its published rates describe the market; your provider's transaction quote can differ.

Start with the unpaid balance

Suppose the original invoice is US$10,000 and a US$2,000 deposit has already been paid. The amount still to fund is US$8,000. Keep the deposit's actual AUD bank cost in the project record, but don't include it again in the future payment amount.

Assumptions: All exchange rates and fees are fictional planning scenarios, not forecasts or provider quotes. Rates are USD per AUD. A separate A$30 transfer fee is assumed in each case, with no additional intermediary or recipient fee.

Scenario	USD per AUD	AUD conversion: 8,000 ÷ rate	Fee	Total AUD cash
Stronger AUD	0.70	$11,428.57	$30.00	$11,458.57
Planning case	0.65	$12,307.69	$30.00	$12,337.69
Weaker AUD	0.60	$13,333.33	$30.00	$13,363.33

Original ASBG worked example. All businesses, amounts and scenarios are fictional. The table contains the same figures as the visual.

At 0.60, paying the same US$8,000 requires A$1,025.64 more than at 0.65, including the unchanged fee. This is the extra cash sensitivity between two selected scenarios, not a prediction of the exchange rate or a guarantee that the range is sufficient.

Check the full amount the supplier must receive

Request a quote that states the foreign amount delivered, total AUD debited, fees, expiry and expected settlement time. Check whether intermediary or recipient charges could reduce the amount reaching the supplier. If the quote already includes a fee or spread in its total, don't add it again.

For staged payments, give every instalment a foreign amount and date. Check the rate for each unpaid instalment. Paying a deposit doesn't fix the later rate unless a separate contractual arrangement provides for that. Record any such arrangement from its terms; this guide doesn't recommend currency hedging or trading products.

Put the scenarios into the operating forecast

Enter the A$12,337.69 planning payment on its expected bank date, then replace it with A$13,363.33 in a separate weaker-AUD case. Compare the low point with your cash buffer. Add shipping and other supplier-order cash costs from their own quotes; the conversion table doesn't include them.

If the invoice is payable in AUD, check the actual agreement before assuming you bear foreign-currency changes. The issue may instead be that the supplier can reprice a later order. That is a different exposure from an existing USD liability.

Keep planning and bookkeeping records distinct

Retain the supplier invoice, deposit evidence, quote, fee details and final payment confirmation under one reference. Replace the estimated AUD payment with the actual debit once it clears. A bank-cost worksheet doesn't establish the exchange rate or date required for accounting and GST treatment; ask your registered practitioner to check that separately.

Use the record-keeping guide for the supporting documents and the forecast-versus-actual worksheet to explain the difference after settlement.

Key takeaways

• Label the rate's units and convert the remaining liability only.
• Compare all-in AUD costs and the amount delivered to the supplier.
• Treat scenarios as sensitivity checks, then replace them with actual payment evidence.

Where to get help

Ask the payment provider to explain its quote and fees. Take accounting, tax or hedging questions to an appropriately qualified adviser, with the invoice and payment records available.