Timing the FX on supplier invoices

When you buy from an overseas supplier, you rarely pay everything at once. A deposit might go down when you place the order, with the balance due on shipment or delivery, sometimes weeks or months later. If the invoice is in a foreign currency, that gap matters: the exchange rate can move between the day you commit and the day you actually pay, and that movement changes what the goods cost you in your home currency.

This is currency exposure, and it sits quietly inside almost every cross-border purchase. The amount in the supplier's currency is fixed, but the home-currency cost is not settled until you convert. This guide explains the exposure in plain terms and the general approaches businesses use to manage it. It deliberately avoids promising particular rates or outcomes, because pricing and availability vary by provider and by market, and you should check the current terms with your own provider.

Where the exposure comes from

The exposure is simply the gap between agreeing a price in one currency and paying it in another, later. A few features of trade make that gap wider than people expect.

• Staged payments. When a deposit is paid now and the balance later, the balance is the part most exposed, because the most time passes before you convert for it.
• Long lead times. Manufacturing and shipping can stretch the interval between order and final payment, and the longer the interval, the more the rate can drift.
• Fixed foreign price, floating home cost. Your supplier's invoice amount does not change, but its value in your home currency does, right up until the moment you convert.

The practical effect is that your landed cost, and therefore your margin, is not fully known until the FX is settled. If you have already quoted or priced your own customers based on an assumed rate, an adverse move can quietly erode the margin you thought you had.

General options for managing the timing

There is no single right answer, and what suits one business may not suit another. In broad terms, the common approaches are these.

• Convert nearer the time. You wait and convert close to when the balance is due, paying at the rate available then. This is simple, but it leaves the home-currency cost unknown until the end.
• Convert earlier and hold the currency. You buy the supplier's currency sooner and hold it until the balance falls due, funding the payment from currency you already have. This can remove the uncertainty for that amount, though it does tie up funds in the foreign currency in the meantime.
• Use a forward arrangement. Some businesses agree in advance to convert a set amount at a future date. Availability, eligibility and terms vary considerably between providers, so treat this as something to ask about rather than assume, and read the terms carefully.

None of these guarantees a better outcome than another; they trade certainty against flexibility in different ways. The point is to make the choice deliberately for each order rather than letting the rate on payment day decide for you.

Build FX timing into how you buy

Whatever approach you lean towards, a little process makes it far more reliable than reacting on the day a balance falls due.

• Know your upcoming foreign-currency commitments. Keep a view of which balances are due, in which currency and roughly when, so nothing forces a last-minute conversion.
• Decide your approach when you place the order, not on payment day. Choosing in advance avoids the pressure of converting at whatever rate happens to be available the moment the invoice is due.
• Be consistent. A repeatable rule for how you handle the balance is usually easier to manage, and easier to review later, than a different judgement call every time.
• Check current terms before you rely on them. Rates, charges and the availability of any forward-style arrangement change, so confirm the specifics with your provider rather than assuming last quarter's terms still hold.

How Altery fits

The hardest part of FX timing is being forced to convert at whatever rate is available the day a balance falls due. Altery is built to give you more control over that moment.

With a multi-currency account you can hold balances in USD, EUR and GBP, so when a supplier balance comes due you can fund it from currency you already hold rather than converting on the spot under time pressure. You can convert on your own timeline rather than at a forced rate on payment day, which lets you act on the approach you chose when you placed the order instead of reacting on the deadline.

Real-time balances let you see how much of each currency you are holding against upcoming commitments, and you can ring-fence money in dedicated pots so the currency earmarked for a particular order's balance is set aside. When the balance is due, you can pay the supplier directly from the currency you hold via SWIFT, SEPA or local payment rails, with clear records to reconcile against the invoice. If you run several buying entities, multi-entity management keeps each one's currency balances separate.

Altery is not a bank, and this is general information, not advice. It does not promise a particular rate, saving or outcome; confirm the current terms with your provider and decide what fits your own trades.

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