Automatic exchange rate calculation

1

I am dealing with a base currency of KES and making some purchases in USD. I find that the exchange rate fluctuates several times a month.

Is there any way to get Manager to automatically determine the exchange rate on the date of invoice payment for the specific transaction rather than have the exchange rate set manually ?

1 Like
2

No, you have to enter the exchange rate manually

3

I am struggling with that at the moment but I find that this doesn’t work for me since I use ‘bulk create’ to update my payments monthly.

4

@kendirangu, it is not clear exactly what you want. Are you trying to:

  • Determine what to pay in one currency to satisfy an invoice in another, OR
  • Force Manager to accept a payment in your base currency as equivalent to a receivable or payable amount in another currency to permanently zero out the invoice?

Further, I am not sure what using Batch Create has to do with this. Before you can enter transactions in batches, you need to already know their parameters. Or are you referring to importing bank statements? Please explain your workflow in detail. And describe what information you need that you are missing.

5

When making purchases, I create respective batch invoices that are in USD and then create the respective batch payments in KES.

The challenge I have is that in a given month over 10 or so transactions, each seems to have a different exchange rate depending on the prevailing rate on the actual date of payment.

I am able to permanently zero out the invoice but it seems that this has an effect on the P&L Foreign exchange gains (losses)

6

This does not make sense. A purchase invoice will be in the currency of the supplier. In your example, that would be USD. You can only enter payments in your base currency (KES) if they come from a bank or cash account denominated in the base currency. You can force equivalence, as I mentioned. But you do that by entering an optional amount in the foreign currency (USD) that equals the amount of the invoice in the foreign currency. The result is that the payment is in KES, but the payable is zeroed, and any future fluctuations in exchange rates increases or decreases the Foreign exchange gains (losses) account rather than letting Accounts payable go up and down, potentially showing that a purchase invoice is over- or underpaid.

I still do not see how you think you could get around determining what amount to pay in KES. Maybe that is what you are really asking, rather than what you did ask for, which was to automatically determine the exchange rate.

7

Tut,
I know what I paid in KES based on my bank statement and that is the amount I use to match the payments. This is invoice is in USD and therefore I have the exchange rate based on this 2 variables.

You are correct, I am forcing the equivalence. What I may have to do, is simply ignore making changes to the exchange rate in the system and work with that method.

8

There are two things to consider:

  1. You can get by without ever entering an exchange rate as far as keeping Accounts receivable and Accounts payable zeroed out. Just force the equivalence as you say you are doing. In those cases, Manager ignores the exchange rate(s) you have entered anyway.
  2. If you have anything denominated in foreign currencies—bank accounts, customers, suppliers, employees—you need an exchange rate in order for your balance sheet to be correct. “Getting by” as mentioned in #1 above only applies when Accounts payable, Accounts receivable, and Employee clearing account are all zero and you have no foreign-currency bank or cash accounts. If any of those conditions is violated, your balance sheet will not be accurate, because the foreign-currency elements will not be properly converted.