Exchange rate changes

But that is exactly when I enter the WUBS money - ie when the money shows up in my Australian bank account… this is usually about 3 weeks after the invoice was issued and it is how I see the actual AUD amount after the exchange rate transaction.

Specifically what part of the screen shot would you like me to provide that would help? You are correct in that no tax is payable on these transactions (except for income tax which is handled separately later on), ie there is no GST applicable.

I thought I had provided all that was needed and have just rubbed out the private info.
Your explanation does not answer the question as to why the 12 Dec 19 receipt balance ended up in the foreign exchange account yet later receipt entries do not. I have added these entries in exactly the same way… ie by stipulating the WUBS USD account as the account on the receipt form. When i do that now - there is nothing that appears in the foreign exchange account???

Can you please provide a recipe for handling the types of transactions I have to make - ie issue an AUD invoice, get paid in USD via WUBS using an exchange rate that applied on date of invoice issue which ultimately ends up as a different amount in my AUD bank account?

Also - I don’t understand your discussion of applicable exchange rates. On the one hand you say that Manager will instantaneously calculate an exchange rate when I enter the two amounts on the receipt (which is good and what I would hope would happen). But on the other hand you mention that an exchange rate “in effect at the time”. What do you mean by this - do you mean the one that is manually entered in the foreign currency setting?

As far as I am concerned there are two exchange rates that should apply for my invoices - ie the one in effect at the time of invoice issue and the second one that applies when the USD payment is actually made. The first one is provided by WUBS when the payment information is quoted, and the second one is determined when WUBS transfers the USD into my Australian account.

My point was that WUBS is essentially irrelevant. As I understand what you’ve said, the money is only passing through WUBS, never being deposited in it as a bank. So why use it at all?

Now that you’ve answered the question about tax codes, nothing else is needed.

Honestly, this discussion has grown too convoluted for me to follow. Foreign currency issues are among the hardest things in Manager to diagnose from afar. We know only what you’ve told us, and if you understood things well enough to describe them perfectly, you would not be asking questions. We don’t have access to all your records. And, while you think you have done things the same way, you may inadvertently have done something differently that leads to your confusion.

At this point, you seem to grasp the main points. The best way to proceed is to set up a test company and make controlled experiments. That way, you eliminate the fear of ruining your actual accounting records. And you will be able to isolate a single transaction and see all its effects.

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Hi Tut - but I want to use the WUBS “virtual” account to handle the exchange rate losses that actually happen. Don’t you think that is reasonable?
I will set up a “Test” business and create an example invoice that demonstrates what happens and then send you the data - would that help?

BTW Tut - I have been able to identify when the change in behaviour occurred with how Manager handles foreign exchange transactions with my business. Prior to 6 Jan 2020 I was using version 19.5.54 and then I upgraded to 19.12.13 at which time the receipts using the WUBS account no longer recorded a foreign exchange gain/loss. On 26 May 2020 I upgraded to 20.5.71.

Does this make any sense to you? Could you please check the code to see if there was a change related to foreign exchange after 19.5.54 and before 19.12.13? I have kept every version of Manager that I have used, starting with 18.10.35 on 9 Oct 2018.

Thanks, Peter

Actually, I do not. I think you should limit bank accounts to actual accounts where you, or someone on your behalf, deposits and withdraws money of the business. As you have described things, WUBS seems like a clearing house or transfer agent.

No. I am sorry, but I do not have the time to support you individually like that. Nor is that my role as a forum moderator.

No, I cannot. I have no access to code archives. Again, I am a forum moderator, another user, not part of any development team.

Ok - and there I was thinking you were one of the developers… So yours is just an opinion - obviously.
Thanks anyway.

I would agree with Tut that only accounts that belong to a business should be included in Balance Sheet.

Ha ha - such conventions…
Actually what I have described is real. ie my customer wants me to use an hourly rate in AUD and then invoice based on billable time. They then want to pay using USD, so I have to make an equivalent invoice amount in USD using the prevailing exchange rate - which we use WUBS to provide. The payment then appears usually about 3 weeks later in my bank account via the WUBS transfer and ends up being different to the total invoice. This is because the exchange rate changed in the interim.

So the Manager accounting package does not provide a way for me to manager this “real” use case. Oh well - I will continue with what I have been doing…

Thanks for all your input :slight_smile:

My suggestion would be to do the following:

  1. Create the sales invoice as you have done, in AU$ with a note about the exchange rate and the US$ required for payment.

  2. Create a new expense account to which you will post the exchange rate variations. Something like this:

  3. When the payment shows up in your AU$ bank account, record it against the invoice as per normal. Enter the amount in AU$ as it appears on the bank statement, even if this is different from the invoiced amount.

  4. Go back to the original sales invoice, and add a new line for the difference between the invoiced amount and the received amount. Allocate this to the expense account created above. (This is based on a suggestion from @Tut above. My idea was to do this in a journal entry, but @Tut’s method is less work and keeps everything together in a single sales invoice.)

    Now the total amount from the sales invoice matches the amount received in your bank account, and Manager will consider the invoice paid in full. Your Summary screen shows the expense that you incurred as a result of the exchange rate fluctuations:

Since you don’t invoice in USD or receive USD, there’s no need to use it in any of your transactions or records. I agree with @Tut and @Joe91 that you shouldn’t create a “virtual” WUBS account.

Another option would be to just set up your customer as a USD account and invoice in USD, but show the AU$ amounts in the description on the invoice:

Then when the AU$ lands in your account, you can specify the USD amount in the receipt edit screen, and Manager will calculate the foreign exchange gains or losses for you:

Then you will have the foreign exchange gains and losses taken care of (assuming you keep the exchange rates up to date in the settings in Manager), and you don’t have to create new expense accounts or add extra line items to your sales invoices. But earlier you seemed reluctant to set your customer up as a USD account.

I would agree with this except that I would change the receive transactions to show the receipt of the full amount owed against the original invoice and add a line to the receipt to post the difference in the amount owed and the banked receipt to the exchange rate gain/loss account

I don’t like the idea of modifying invoices once they have been raised

Definitely do this if you go this route. Otherwise, the sales invoice will always show a balance due. I agree with @Joe91 that changing the sales invoice is poor accounting practice.

Be aware of the fourth option checkbox from the bottom: Total amount in AUD. You would not need to put it into the description. This is explained in the Guide: Create sales invoices | Manager.

Good point. I’m used to modifying purchase invoices for freight-in calculations, but that’s something completely different.

Ah, I hadn’t seen that. Thanks.

With these corrections to my suggested workflows I think you have two good options in Manager to accommodate your requirements, @pjy. What do you think?

Hi Graham, How & Tut,

Thanks for persisting with helping on this - I really appreciate it. I had toyed with the idea of switching my customer to be a USD customer and played a bit with some of the invoices. The idea of putting the AUD hourly rate in the description is useful, so I may see how that goes. The issue for me is that my customer will probably not want to see a change in invoice format at this stage, so I will probably have to produce AUD versions of the invoice as before but just maintain USD versions in Manager. A bit ugly…

However I am still at a loss to understand why invoices created with v 19.5.54 and earlier produced foreign exchange gain/loss entries, yet since that version they are not created any longer. Something must have changed in the software as I have not changed the procedure I use.

Again - thanks all for your help!

I have just tried adding a 2nd receipt line with the delta foreign exchange amount after changing the first line to match the value of the invoice. This doesn’t work because I need to specify the delta amount in USD, ie the same as for the customer payment - and I don’t know what that is without doing a manual conversion… And this doesn’t look right either - it looks as though there are two parts to the transaction - which isn’t true. There is just an exchange rate variation…

I will toy more with the idea of switching my customer to USD and creating a printed only version of the invoice to send to the customer in AUD as I have been doing - ie have two versions of my customer - an AUD version for creating a temporary printed invoice and a USD version for keeping in Manager…

Do not do this inside Manager. That will effectively double what you are invoicing to your customer and what they owe you.

Yep - not a good way to go, but it would just be a temporary paper invoice to keep my customer happy. However - not seriously considering it - too messy…

You could use the “Sales Quote” for this and rename (to, Invoice/Tax Invoice/Proforma Invoice) using “Custom Title”

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Though I don’t like modifying the original invoice, I have just tried Graham’s earlier suggestion of creating an Expense account “Exchange Rate Changes in USD payments” and it works well. A pity this can’t be handled automatically with the default Exchange Rate income account…