Forward exchange contract for importers: what to do when the rate moves before the balance is due

You agreed the price with the factory in their currency, paid the deposit, and budgeted the balance at the rate that was around on the day. Six weeks later production is finishing, the balance invoice is due before the container is booked, and the rate has moved the wrong way. The supplier hasn’t asked for a cent more, yet the payment now costs more of your dollars.

This guide covers what you can do on the day, what a forward exchange contract does for the next order, and the border detail that trips people up.

How much does a rate move actually cost on a balance?

The sum is simple. Divide the balance by the rate and you get the dollars it costs. If the rate moves 5% against you, the same invoice costs about 5% more, give or take.

Illustrative only. A homewares importer has a $100,000 order on a 30% deposit and a 70% balance before shipment. At the budget rate the balance is $70,000. The deposit was paid at the budget rate. Before the balance is due, the exchange rate moves 5% against them.

	At budget rate	After a 5% adverse move
Deposit (paid earlier)	$30,000	$30,000
Balance on payment day	$70,000	about $73,700
Order total	$100,000	about $103,700
Extra cash needed		about $3,700

If the stock was priced to a 25% gross margin, $3,700 on a $100,000 order takes roughly 3.7 points off it. If the margin was closer to 12%, you’ve lost nearly a third of the profit on the container. A thin-margin line feels this fastest, which is why it matters whether you’ve built any buffer into the price. Our guide to pricing imported products covers building a conservative budget rate into the landed cost.

What can you do when the rate has already moved?

You can’t change the rate, but you can change how and when the cost lands. In rough order of how often they work:

1. Pay in stages. If the balance is large, ask whether the supplier will accept part now and part at the shipping date, or a staged release as cartons pass inspection. This spreads your exposure across more than one rate and keeps cash in your account longer. Our guide to negotiating deposit terms covers what’s realistic to ask for.
2. Ask for a rate share or a discount. Some suppliers will split an unusual move, especially on repeat business. You won’t always get it. Asking costs nothing.
3. Reprice or reduce. Check whether you can lift the sell price on the new landed cost, or trim the order and carry the saved cash into the next run. The landed cost calculator shows the per-unit effect.
4. Fund the shortfall. If the stock still stacks up at the new cost, a short bridge for the extra $3,700 until sales come in may be sensible. Weigh the estimated total cost of finance, in dollars, against the margin you’d lose by cancelling.
5. Wait, with a limit. The rate might come back. It might not. Waiting on the balance date is a bet, and your supplier may hold the goods or lose your production slot. If you do wait, set a number in advance at which you’ll pay.

Don’t try to claw the loss back by short-changing the supplier or delaying a balance on shaky grounds. A good supplier relationship is worth more than one adverse move.

Want to talk through a balance that’s now bigger than planned? Check your options in 60 seconds, with no credit check when you first enquire.

What is a forward exchange contract for importers?

A forward fixes the rate today for a payment on a future date. You agree the amount, the date and the rate with a bank or foreign exchange provider. On that date you pay in dollars and the provider sends the supplier’s currency. Whatever the market does in between, your cost was set on the day you booked.

The RBA describes forwards as “a commitment to an outright purchase or sale of currency at a specified future date”, and notes that importers who owe a foreign currency typically buy it forward while exporters sell it forward. They’re also the most commonly used hedging instrument in Australia, per the RBA’s paper on hedging instruments. A few features matter for a small importer:

• Binding. Unlike an option, a forward is an obligation. If the rate moves in your favour you still pay the contracted rate. You give up the good surprise to avoid the bad one.
• No premium in the basic form. The RBA notes that a forward doesn’t need an upfront payment, unlike options. Some providers ask for a deposit or margin anyway, and may ask for more if the market moves against you. That’s a cash call, so ask first.
• Tied to a date. If production or shipping slips, your balance date may move, and the forward won’t. Ask about rolling or extending before you book.

This is general information, not a recommendation of any product or provider.

When does a forward make sense, and when doesn’t it?

It tends to make sense when the order is confirmed and the balance date is firm, the margin is thin enough that a 5% swing would hurt, and you can’t pass cost changes on to customers quickly, for example because you’ve quoted a retailer a fixed price for a program.

It makes less sense for forecast orders that may change size, for goods priced to absorb a swing, or for amounts so small that the saving doesn’t justify the paperwork.

A practical sequence for the next order:

1. Set a budget rate you’re comfortable with, not today’s rate, and price the stock on it.
2. When the order is confirmed, decide how much of the balance to lock. You can fix all of it or only the part you can’t afford to see move.
3. Match the settlement date to the balance trigger in your supplier terms, with a few days of buffer.
4. Put the date on your import cash timeline so you know when the dollars leave your account.
5. After shipping, compare actual versus budget and feed it into the next order’s price.

The exchange-rate timing page covers where the rate bites across deposit, balance and customs value. Locking the balance doesn’t hedge a deposit you’ve already paid at an earlier rate, and it doesn’t help with freight or insurance billed in another currency.

What should you check before signing with a provider?

The product is simple, and the risk is mostly in the paperwork. Before you sign:

• Licence and client type. Foreign exchange contracts are financial products. In 2026, ASIC imposed licence conditions on one provider after finding more than 2,800 retail clients had been wrongly treated as wholesale clients. Retail clients are entitled to protections such as a product disclosure statement and access to external dispute resolution. Ask how you’re classified and look the licence up on ASIC’s register.
• Margin and deposit terms. What do you pay upfront, and what happens if the rate moves against you before settlement?
• Early or late settlement. What does it cost to change the date if your supplier slips?
• The cost. Providers build their charge into the rate, so compare two or three quotes for the same amount and date, in dollars.

Does a forward change duty and import GST?

No, and this is where importers get confused. The ABF converts your invoice into dollars for customs purposes “at the rate of exchange prevailing on the day of export”, which is not the day you pay or the day the goods arrive. For sea cargo, the day of export is the day the vessel departs the loading port, per the ABF’s exchange rate page.

So there are two conversions on one order:

What	Rate used	Who sets it
What you pay the supplier	The rate on payment day, or your forward rate	Market, or your contract
Customs value for duty and import GST	The rate on the day of export	ABF, from the RBA’s schedule

They won’t match, and that’s normal. The import GST you pay at the border is claimable on your BAS, and the deferred GST scheme can remove the cash gap for eligible importers. Keep the supplier payment and the customs value as separate lines in your landed cost workings, and the difference won’t confuse your bookkeeper.

Planning for the next balance without hedging at all

If a forward feels like too much for the size of your order, you can do much of the same work with simple habits:

• Price on a budget rate that’s deliberately cautious. A rate that’s a few percent worse than today’s builds a cushion into every sale.
• Pay in stages so that the whole balance isn’t tied to one date.
• Check the Incoterm. It decides who bears freight and insurance cost and risk, which are also moving parts in your landed cost. See Incoterms for importers.
• Keep a facility ready. A line of credit for imports sized to your peak means a bigger balance is a drawdown, not a scramble.

The balance has moved, and the stock still sells. Let’s work it out

A rate move on a balance is rarely a reason to cancel an order that still sells well at the new cost. It’s a timing problem, and a short, well-sized facility can carry it. When the shortfall is bigger than your cash buffer, we’d rather talk it through with you than have you pause a good run of stock.

Enquiring takes about 60 seconds and won’t touch your credit score, so you can ask the question without any commitment. We don’t send your details to a pile of lenders, so your phone stays quiet. A real person looks at your actual situation, from the order size to the balance date, and calls you. Please fill the form in accurately (turnover, the size of the balance and when it’s due) so we can match the right option first time.

Find out where you stand →