A settlement in foreign currency needs a clear conversion basis

The percentage does not identify the currency risk

A debtor offers a discounted settlement in a different currency from the invoice. The amount looks attractive after a quick online conversion. Before accepting, identify exactly what sum and currency the proposal promises. A fixed overseas amount and a fixed Australian-dollar recovery are different commercial bargains, even when their values happen to match on the day you discuss them.

Keep the original claim and offer separate

Record the invoice currency, outstanding balance and proposed settlement currency. Ask your accountant to explain the comparison on a consistent basis. Do not quietly replace the original debt with a converted figure in the records simply to make the offer easier to read. The legal agreement and accounting entry both need to reflect what is actually agreed.

Clarify the conversion method

Business.gov.au's contract guidance recommends specifying fee calculations and payment arrangements. Ask which party bears exchange movements and what rate, source or date would apply if conversion forms part of the bargain. Have unclear terms reviewed professionally. An approximate currency website value is not necessarily the rate available for the actual transfer or the rate the agreement requires.

Source: business.gov.au: Prepare a contract

Consider a hypothetical movement

Imagine a fixed overseas-currency offer that would produce about $15,000 Australian today, with payment proposed several weeks later. The Australian amount may change before conversion. Alternatively, the debtor might promise a fixed Australian amount and arrange the conversion itself. These examples allocate uncertainty differently; neither establishes what the parties have agreed in your own negotiation.

Include transfer costs without guessing

Ask the relevant financial provider about available transfer arrangements, charges and how the recipient amount is calculated. Check whether the proposed settlement addresses deductions from the transfer. Do not assume all quoted fees are included or that money sent equals money received. Raise any mismatch with the adviser before documenting a release based on a particular net recovery.

Make the comparison useful for the decision

Show the decision-maker the promised currency amount, conversion basis, likely charges and any remaining uncertainty. Keep that assessment separate from the eventual accounting treatment and bank reconciliation. If the offer is accepted, document the agreed allocation of exchange risk. The aim is to understand the recovery being purchased by the discount, rather than relying on a favourable conversion screenshot.