Foreign Exchange
November 14 2012

With any business big or small if you have customers or suppliers that are overseas you will need to manage the impact of foreign exchange rates.  As the Australian dollar increases it means that if your customers are overseas then it will cost more for them to buy your products.  On the other hand as the Australian dollar increases it will mean any purchases made overseas will be less. 

If you are a small at home business it can be easy to simply ignore the impact of foreign currency transactions as just an accepted part of your business but this can be a mistake, especially if you are operating a business where the volume of transactions and profit margins may be low. 

Furthermore, the timing of the transactions can have an impact as well.

For example, you may purchase the equivalent of six months stock in one order at today’s exchange rate.  Depending on whether the exchange rate goes up or down as you sell the stock, it will directly impact on your profit margins.  This is why you need to monitor the impact of the changing exchange rates and, if needed, adjust your prices of your products. 

To help you with your pricing if you import products from overseas then consider our Import Pricing Template that can be used to calculate your profit margins and recommended retail price.