In the current version, I cannot manage to get the base currency balance of an employee account to be correctly calculated.
Assuming USD as the base currency and EUR as a foreign currency also used in such account, Manager calculates the USD balance iteratively, by summing the previous day’s USD balance with the current day’s USD amount, without recomputing the previous day’s USD balance using the day’s exchange rate.
So for example if an employee is owed 1,000 EUR, on a given day, with an exchange rate of 1.30 against USD, his balance will be 1,300 USD. Then on the following day, if he is owed an additional 10,000 EUR, with the day’s exchange rate having increased to 1.40, the balance will be incorrectly calculated as 1,300 USD + 14,000 USD = 15,300 USD instead of the correct (1,000+10,000)*1.40 = 15,400 USD.
This makes the whole multi-currency feature unusable as all reports show wrong figures :/. Did I miss anything?
A test .manager file to easily reproduce the bug is available here: Dropbox - Error
Your calculations are correct but there is no bug. Manager at the moment doesn’t allow employee accounts to be denominated in foreign currency.
Your assumption is that employee account is denominated in EUR but it is denominated in USD. There is no way in the system to set employee to be denominated in EUR.
Do you need this feature? I didn’t implement it because I thought it would be rare to issue employees their payslips in foreign currency. But system can totally support this scenario. If there is demand for this, I can easily add it. Then you will be able to set employee to be in EUR which will show figures as per your calculations.
Thanks for your quick reply. I hope you don’t mind the many comments I made during the weekend :). I am very enthusiastic about Manager and impressed by what you have achieved so far.
It is indeed like if Manager immediately converted the EUR amount into USD (which is indeed correct if the employee account is exclusively in USD). It seems to be done the same way for expense claims sub-accounts.
I would really need the possibility to specify different currencies in Payslip items (as per my post here How to specify currencies in payslips), Employee clearing sub-accounts, expense claims and more generically in journals.
For example, Manager would automatically create the following internal sub accounts if any USD or EUR transaction happens:
“Employee clearing account > John Doe > EUR”
“Employee clearing account > John Doe > USD”
It would not be necessary to alter the current account selection dropdown, as currency would be already selected in another field.
If you can already handle this internally, it would be worth adding these fields by default for those who enable multi-currency. I know a lot of people who have left or did not consider Xero because of its very poor multi-currency support (of which I am sure many would be amazed by Manager). I am one of them and hope Manager can become the holy grail.
To keep the current immediate FX conversion feature you described, you could add an explicit checkbox in the expense claim or payslip form like “Convert using day’s exchange rate (no currency gains/loss will be recorded)”.
Are you paying wages in USD and reimbursing employees in EUR for out of pocket expenses they have incurred in EUR? Is this the reason why you need “multi-currency” payroll?
Or do you have multiple employees while some are being paid salary in USD and some in EUR?
Employees may be paid in both USD and a foreign currency for example (I know this is very common for expats, getting paid separate amounts in both the local currency, and their home currency). In such instance, where local deductions are applicable, they would also need to be entered in the applicable currency in the payslip.
Employees can also incurr out of pocket expenses in both USD and a foreign currency, and want to be reimbursed in the original currency (which the company can do especially when it has the corresponding foreign currency account).
And finally, yes, some employees (or contractors treated as employees in Manager for simplicity) may be paid only in USD, while others only in a foreign currency.
Multi-currency journal entries have been already implemented.
Ability to maintain expense claim liabilities in foreign currency, I will try to come up with solution by end of this month. I agree this is valid requirement and it will be implemented.
I’m still not convinced with foreign currency payslips. Sure, you can bend payslips and use it as accounts payable replacement for contractors that invoice you in foreign currency but that seems wrong. Mostly because once you start using payslips for foreign contractors, inevitably you will start using it for domestic contractors too and that’s a problem if any of your contractors charge VAT, GST or similar.
The only thing that would convince me to support foreign currency payslips would be someone who says - yes, I do employ staff and pay them salary or wages in foreign currency. Nobody said that yet.
Thanks for the update.
By contractors I was actually referring to people on fixed-length contracts, working exclusively for the employer who pays them as other “long-term” employees, not external consultants dealing at arm’s length and for which I totally agree payslips are inappropriate.
I do employ staff and pay them wages in a currency different than the company’s base currency, and have seen many times foreigners who are employed with an “expat” status have their salary split into both an amount paid in their home currency in their home country, and in the local currency for their local expenses. It is obviously not the most common scenario so it would make sense to allow it only upon activation of a “Multi-currency payslips” checkbox in the Settings.
A good first step could be to allow multi-currency journal entries to debit/credit an employee account in a foreign currency (not converted immediately into the base currency), if not already the case with your latest implementation. And then whenever possible to support multi-currency payslip items.
Check the latest version (14.10.7) which now allows to set currency for individual employees.
When you set foreign currency on an employee, their clearing account will be maintained in that foreign currency (rather than base currency). Also, all payslips of that employee will be in specified foreign currency.
Great, thanks for the update. Will you make “multi-currency employees” (with employees that can also be authorized as expense claim payees) in the future? I understand it makes sense to have one sub-account per currency, but from a semantic point of view it would be good to have the entity “Employee” and then for each of them to specify allowed currencies (not just one), rather than cloning employees just for currency purposes.
When creating a payslip or expense claim, items in each currency would then be allocated to the right currency sub-account.
You could optionally offer the option to allow immediate conversion at the day’s official exchange rate for those who need just one currency and would like to enter for example an expense claim in the original EUR amount (for audit purposes), but get refunded in the base USD (some companies have this kind of policy). It could be a simple “Convert to base currency at the day’s exchange rate” checkbox next to the Currency dropdown list. This checkbox would only appear if the payee has the corresponding currency sub-account:
If the payee is only authorized for USD only, then an EUR entry would automatically be converted using the day’s exchange rate.
If the payee is authorized for EUR and USD, then the checkbox would appear for both options (record as EUR or record as USD).
I understand you are working on allowing to enter custom exchange rate incurred for each transaction. This option would only be shown when a payment is to be converted to base currency. Manager would then automatically consider the FX difference with the market rate as bank charges (seems the most accurate way to describe this cost, but I am not sure what accounting standards dictate for this)?
I cannot change the exchange rate manually while creating payslips but I can change it while clearing the account. Is there a way to change the exchange rate for payslip also?
For example:
Base currency is naira (NGN). All our bank accounts, suppliers & customers are in base currencies, except some employees who are from India.
If we want to pay rupee 30000/- for a Indian employee I created a payslip for him. It showed me 82,564 NGN on payslip to be payed at a rate of 1Rs = 2.75NGN, but i want that to be 1Rs= 3.4NGN.
But while I’m spending money from NGN bank account for employee clearing account >XYZ, it was paying in NGN and I can able to change the exchange rate after spending the money but I wanted to change the exchange rate of payslip also.
If Indian employee is to be paid 30,000 Indian Rupee, then his employee account should be set to Indian Rupee currency. Have you done that? It looks like his employee account is set to NGN by the sound what you are saying.
From below screenshot I can’t see exchange rate option unless I create at least one customer/supplier in INR currency. I selected base currency NGN and INR for my employee, but i can’t see exchange option.
If I have a customer/supplier invoice with different currency, I can edit the exchange rate manually as the automatic update is 1Rs= 2.7NGN, but i want to change it to 1Rs = 3.4NGN.
Building on this… if I have an employee that uses two currencies (or even more) and I want to refund his/her expenses with the same currency used for specific claims… I can create two “employees” for the same person, one for each currency, and choose the employee/currency based on the specific currency denomination of the expense claim.
Correct? What would be the implication in terms of forex loss/gains?
Right now every expense and refund is converted in the base currency, but that becomes difficult to manage as rates keep changing.
You are correct in your presumptions about how to treat an employee who is reimbursed in multiple currencies. Once you except that fact, the forex gains or losses are no different for that employee, or should I say those employees, than they are for any others. Do you have specific questions?