Hello, my business deal with multiple currencies for example i purchase with USD and sell with LBP.
the figure in the summary tab shows a big number now and i don’t understand how it is calculated neither where it did come from. this is affecting my P&L as it is showing me fake gain. could you please help
Have you ever entered any exchange rates under Settings tab then Exchange Rates ?
yes it is 1 usd = 1515 LBP
I’m wondering about this too. I have several suppliers who charge me in USD. PayPal does the currency conversions for me and charges me in AUD. When I enter the payment in Manager, I enter both the USD and AUD amounts in the appropriate fields. Invoices appear as paid and bank accounts balance.
But here’s the thing… All these invoices are paid immediately, so in Manager each invoice and corresponding payment have the same date—yet I am getting significant amounts appearing under ‘Currency gains (losses)’. I would have thought currency gains/losses only happen if you pay invoices some time after they are issued and exchange rates change in the meantime?
I would rather turn this feature off altogether than have to manually calculate and enter exchange rates before every overseas transaction.
What I need to do is to allow clicking on transactions posted to Currency gains (losses) account. This way you could review calculations Manager has made and why it has made these transactions.
If you need to resolve this issue before getting this feature, then send your accounting file to support@manager.io.
Thanks @lubos. I got the amounts down somewhat by entering an exchange rate before the first transaction, but I’d like them to be zero. As I said, I’d rather just be able to turn off the calculation of Currency gains (losses) altogether, since I pay these transactions on the same day they’re billed.
In the meantime, thank you very much for the offer of fixing it in my file. I’ll take you up on that. Email just sent.
Currency gains (losses) calculations in your file are correct. What is happening is that when you create purchase invoice, the transaction is brought up in the books as at exchange rate defined under Exchange Rates section in Settings tab. When invoice is paid, it might be paid at slightly different exchange rate. The difference between those two rates will be currency gain (loss).
However, if you pay your purchase invoices on the same day, I wouldn’t enter these expenses as purchase invoices at all. Why not simply allocate the payment straight to some expense account? This way there won’t be any exchange rate conversions and no currency exchange gain or loss.
Or, if you are paying those purchase invoices using expense claims. Set expense claim to the same currency as is the purchase invoice that is being paid. This will also avoid different exchange rates being used on the same day.
[quote=“lubos, post:7, topic:3518, full:true”]
Currency gains (losses) calculations in your file are correct. What is happening is that when you create purchase invoice, the transaction is brought up in the books as at exchange rate defined under Exchange Rates section in Settings tab. When invoice is paid, it might be paid at slightly different exchange rate. The difference between those two rates will be currency gain (loss).[/quote]
Okay, thanks for explaining how it works. I can see now why it’s not doing what I expected it to.
Hmm… What do you think about this as a feature suggestion… A check box in the payment window (that appears along with the foreign currency field on relevant transactions) which allows you to automatically create a new exchange rate for that date and currency, based on the amounts you enter? It might show the calculated exchange rate and be labelled Create New Exchange Rate on 13/8/2015? (This date could be an editable field, but it would default to the date of the payment.) If I ticked that box and then went to Settings > Exchange Rates, I would see the new exchange rate had been added.
[quote=“lubos, post:7, topic:3518, full:true”]
However, if you pay your purchase invoices on the same day, I wouldn’t enter these expenses as purchase invoices at all. Why not simply allocate the payment straight to some expense account? This way there won’t be any exchange rate conversions and no currency exchange gain or loss.[/quote]
The reason I started doing it this way is to keep a record of costs associated with each supplier. When entering a New Expense Claim, the Payee field seems not to be linked to the Supplier database, so I figured there would be no way to track supplier costs if I just entered the payment directly here.
Yes, I could just enter everything in AUD of course. That’s what I used to do in my very old version of MYOB. But I liked that Manager supported multiple currencies—I liked that I could enter each invoice exactly as it appears, and I liked the way I could enter both currency amounts in the payment window. It felt like a very nice way of doing things… That is, except for the unintended ‘currency gain (loss)’.
What I meant is that your invoice can be still entered in USD. When you pay for the invoice using expense claims, you can make the expense claim in USD too. I’m not saying to switch off multi-currency.
[quote=“lubos, post:9, topic:3518, full:true”]What I meant is that your invoice can be still entered in USD. When you pay for the invoice using expense claims, you can make the expense claim in USD too. I’m not saying to switch off multi-currency.
[/quote]
Hmm… How does this affect my accrual based profit and loss statement and balance sheet? I actually hadn’t thought about that before. Everything is reported to the ATO in AUD right? So regardless of how I record the payment, if I’m entering invoices in USD, I’m really relying on that exchange rate being right aren’t I. I guess I’m going to have to go back in, calculate the exchange rate for each payment and then manually create a new exchange rate for each transaction. Again, this would be much easier if there was an option to automatically create a new exchange rate from the payment window. What did you think of that idea BTW?
If both purchase invoice and expense claim are in the same currency (USD), there won’t be any currency gain/loss as both transaction will be using the same exchange rate as specified under Exchange Rates section in Settings tab.
Yep, I understand that paying in USD resolves the currency gain/loss issue. But now I’m wondering about how it affects my reporting of expenses. Even though the amounts don’t have to reconcile to my bank account (since I’m paying from a personal account Manager doesn’t know about), I still should be keeping accurate records and reporting correct amounts in AUD to the ATO. So by recording the expense claim in USD we’ve dodged one bullet, only to move into the path of another one—unless I’m missing something?
The figures in AUD will be correct as long as you keep entering correct exchange rates under Settings tab.
Exactly. So what I’m saying is, either way I still have to calculate the exchange rate for each payment and then manually create a new Exchange Rate in Settings for each transaction—there’s no avoiding this.
You still haven’t said what you thought of my idea—about a check box to automatically create a new exchange rate from the payment window? It would make things easier no?
The idea with checkbox is not really solving any problem.
And you won’t need to calculate exchange rate for each payment. Try to record expense claim in USD paying for purchase invoice which is also denominated in USD.
We seem to be talking in circles a bit here… Before, you said, ‘The figures in AUD will be correct as long as you keep entering correct exchange rates under Settings tab.’ Now you’re saying I don’t need to do it for each payment. Again, unless I’m misunderstanding something, if I want my expense reporting in AUD to match what I actually paid in AUD, then yes, I have to create a new Exchange Rate under Settings that matches the exchange rate used by eBay, and I have to do this for each transaction (because the exchange rate will have varied between transactions). This seems like a duplication of effort to me, because Manager has already calculated the correct exchange rate in the payment window when I enter the amount in both USD and AUD. My checkbox suggestions simply takes that calculation and saves it as a new Exchange Rate, to save me having to do it myself in Settings.
Anyway, I guess we can agree to disagree on that being a useful feature. I’m going to head in now and do it manually (while leaving payments in AUD) just to check that this restores currency gain/loss to zero. In my mind I’d rather leave payments in AUD, because at least then any discrepancy is easily visible in the non-zero currency gain/loss. If I pay in USD without manually adjusting exchange rates, my P&L reporting will be wrong but I will likely never notice.
Thanks for taking the time to help and explain things as always.
Exchange rates don’t have to be entered every day. Even once a month is fine. So whether you have 10 payments a month or 1,000 payments a month, you would enter exchange rate only once in that month under Exchange Rates and all those transactions would be using that exchange rate.
Do you mean that would give me a ‘near enough’ kind of calculation?
Anyway, I’ve already gone and in and manually created new Exchange Rates in Settings on the day of each transaction. A few minutes of calculator work and copying and pasting later… ‘Currency gains (losses)’ is down to minus one cent. I guess that’s a slight rounding discrepancy between the rates I entered and the ones being done automatically by Manager. I guess my OCD can live with that!