I get that the Billable time - movement amount is coming from the differences in Exchange rates on the days the hours are entered vs the day the invoice is generated. But I don’t understand what should happen next to the movement account, should it be zeroed out with the exchange loses?
Additionally, if I enter a new Exchange rate for another day, there will be changes in the Foreign exchange gains account. Should something else be entered to account for that?
Can someone clarify the how / why Manager does the this, and what is the proper way to interpret it?
Of course, billable time is entered in the currency of the customer to whom it will be billed. But it will be converted into base currency for display in the P&L statement. However, on the balance sheet, Billable time keeps track in both base and foreign currencies, with the base currency amount subject to fluctuation with exchange rates. But the amount in Billable time - movement does not change.
Invoicing, when it happens, occurs at the original foreign currency amount. Since exchange rates might have changed, the amount transferred from Billable time - movement to Billable time - invoiced might not be the same as the original equivalent credit to Billable time - movement. The difference remains in Billable time - movement, but is automatically offset by an entry to Foreign exchange gains (losses), shown as Foreign Exchange Revaluation.
So…no, the Billable time - movement account is not zeroed out. But…yes, it is offset automatically. And if you drill down into the Foreign exchange gains (losses) balance, you will see that the revaluation for the day includes (potentially) a lot of other transactions that are similarly affected.
No, it is all automatic.
Hopefully my explanation helps. It is easy to imagine that things could be quite complex if you are entering billable time in multiple currencies for different customers during a single day and updating exchange rates every day, as well. Probably the best way to understand is to create a test business with no other entries and make just a few transactions. Examine through drill-downs all the balances at every step, and I think you will see the effects I am talking about.
