Bank Feeds
Part of Multi-currency accounting tools
Reconciling foreign-currency payment fees
Trace a foreign payment from invoice through fee, conversion and payout to the bank while retaining the gross amount.
Reconcile a foreign-currency payment from the invoice or bill through the provider's breakdown to the bank statement. Keep the gross payment, any separately identified fee, conversion and net bank movement visible. A net deposit alone cannot show whether a difference is a fee or the exchange rate.
Establish the gross-to-net trail
Collect the invoice or bill, payer remittance, provider activity and bank advice. Record the original obligation, amount paid, currency at each stage, any charge deducted, conversion rate and final bank amount. Identify who bore the charge. A short receipt might reflect an underpayment, an intermediary deduction or conversion; the documents determine which.
A fictional provider reports a USD 1,000 customer payment, a separately identified USD 20 processing fee charged to the business, and a USD 980 payout to its USD account.
If the customer paid the USD 1,000 obligation in full, the identified fee explains why the business received USD 980; it does not make the customer's payment USD 980. A later conversion to AUD is another movement to reconcile.
Evidence / What to establish
- Invoice and remittance
- What was owed, and what did the payer send?
- Provider activity
- Which fee, refund, reserve or other deduction changed the payout?
- Conversion advice
- Which amounts and currencies were exchanged at what rate?
- Bank statement
- What actually settled, in which account and on what date?
- Ledger
- Is each invoice, payment, fee and transfer represented once?
Reconciling Foreign-Currency Payment Fees: Key Steps
- Gather documentationInvoice, remittance, provider activity statement, conversion advice, bank statement
- Confirm conversion rate and net amountRecord exchange rate used and final AUD payout amount
- Match to bank statementVerify settlement date, account, and amount received in AUD
- Final review and approvalAccountant confirms GST treatment, ledger accuracy, and any outstanding items
Separate fees from exchange differences
AASB 121 sets out how foreign currency transactions and foreign operations are included in financial statements, and how those statements are translated into a presentation currency. A separately disclosed payment fee has its own supporting record. A less favourable conversion rate may be reflected in the amount exchanged without a separate fee line. Do not invent a fee by comparing a market reference rate with a bank result.
Match the receipt or payment to the existing invoice or bill. Where one payout contains several payments, compare its reference and components before matching the net bank line. Keep money held by the provider or still in transit identified for later reconciliation.
Recording the bank deposit as a fresh sale when the sale is already in the ledger can duplicate income.
Have the accountant approve the actual accounts, rate treatment and any GST code.
Fee vs. Exchange Rate Difference: What’s the Difference?
- Exchange Rate DifferenceResult of using a non-market rate; no separate fee line. Reflects actual conversion outcome.
- Common MistakeAssuming a less favourable rate is a fee – do not invent a fee based on rate comparison.
Investigate what remains
Check currency, sign, date, grouped payouts, part payments, refunds and rounding. Source, provider and bank dates can differ.
Give any unresolved amount an owner and retain its evidence rather than adjusting it to zero. The reconciliation is complete when another reviewer can follow the obligation to the payment, identified charges, conversion and bank movement, with any amount still in transit stated.
