Sorry for the long post.
As an amateur accountant struggling to do better a job than the several “professional” accountants I have hired in the past and who failed miserably every time, I have been having lots of doubts about how to best manage forex. From the “experience” gained with over the past two year using Manager, when it comes to forex I feel there is a trade-off between using 1) interaccount transfers and forex payments through which Manager calculates automatically the exchange rates and the forex gain/losses, and 2) manually adding forex exchange rates in Settings. I believe, however, both methods can be used at the same time.
From what I understand (and I might be very wrong) using only interaccount transfers and forex payments lets the initial exchange rates (we added exchange rates for all the currencies we use, i.e. USD, EUR, ZAR, for the first day of operations of our company) stable over a whole period of time until a new exchange rate is added manually. The differences between this base line forex and the new exchange rates calculated automatically by Manager produce the forex gains/losses. This also means, I think, that for example the Cost of Goods Sold and the value of the stock in assets stays stable over the same period of time.
Using instead (also) manually added exchange rates (for examples the same exact ones that would be given by the interaccount transfers on the same dates) would increase/decrease the value for example of the cost of goods sold and inventory, while the impact of forex gains/losses would be limited or maybe 0.
This “feeling” comes for example from one instance we have: I added a RWF/USD exchange rate for the beginning of our operations in December 2015. It was 750. Since then the USD has gone up. We have done several RWF/USD exchanges over time, and the rate reached 858 in December 2017 when we exchanged some USD to RWF. However, in May 2018 we issued an invoice in RWF and received a payment in USD. From what I can see the rate used by Manager is still the initial 750, which means this invoice is not fully paid according to Manager. Obviously this is not the best solution for this payment as the requested amount in USD to the client should have covered the whole amount in RWF based on the exchange rate at the time of the payment. Based on this, I thought the difference would somehow appear somewhere in the list of forex gains/losses and I looked for a forex gain/loss on the same date of the payment from the client, but I cannot see any anything on that date. This is probably because the payment was in USD and came on our USD account so there was no conversion.
This topic is pretty important to our business in context in which our local currency slowly but constantly loses its value against all other major currencies. In fact I have the feeling that by relying only on automatic exchange rates the cost of goods appears to be lower than it truly is and our pricing strategy might be heavily impacted if we rely too much on the average costs of each item, our margins might be too low. At the same time, high forex gains/losses (especially losses) are seen suspiciously by tax authorities. Instead I would like to have more reliable costs of goods and limit the impact of forex gains/losses, and maybe adding exchange rates manually might do the trick.
I am not sure if this makes sense, but can someone give some advice on how to manage forex in Manager by using manually added exchange rates and/or interaccount transfers and forex payments? Is there a guide maybe somewhere on this topic? Can someone also give a clear explanation on how to read the single forex gains/losses transactions?