DESKTOP EDITION CLOUD EDITION SERVER EDITION GUIDES FORUM

Exchange Rate should be a separate module that can be selected in customize tab


#1

Whenever I use Manager, Exchange rate always gives me a headache. Could you please make it select-able in customize tab? That would be great for sure.

Thanks.


#2

I am curious. Do you need or use multiple currencies?


#3

Not sure what’s the issue. Exchange rates are only visible if you have Base currency set.

And if you are using multiple currencies then you absolutely need exchange rates screen otherwise there is no way Manager would be able to correctly calculate your exchange gains & losses.


#4

I agree with Aspire and recommend once again that exchange rate algorithm will enable manual re-editing.
Yes I’m using multi currency purchase orders (up to 5 different currencies) and this is a real headache, in my opinion manual procedure will enable full control.


#5

Hi @Tut and @lubos,

Yes, I use multiple currencies - currently using MMK (which is used as Base Currency), USD and SGD. According to our company, exchange rate gain or loss daily means nothing because it’s just an intangible change. We count gain or loss only when we sell or buy. Normally, we record transactions in exchanged currencies based on FIFO method - please refer: Exchange Rate FIFO Method.

Thanks.


#6

If you maintain accounts in multiple currencies, movements in exchange rates will absolutely impact your books. You don’t have to enter exchange rates for each day. Once a month should be fine. But exchange rates is inseparable concept from multi-currency. It cannot be disabled otherwise it wouldn’t be multi-currency.

Perhaps you need to be more specific what exactly is the problem and how it affects your books. I’m always interested to keep improving multi-currency implementation in Manager so it’s easier to deal with but what you are proposing (disabling exchange rates) is not an option.

Regarding FIFO method, as far as I’m concerned there is no such a thing when it comes to multi-currency. Can you find some reference on the Internet explaining this method?


#7

There’re 3 methods: FIFO (First In, First Out), LIFO (Last In, First Out) and Average. Those methods are accepted by both Accountants and Auditors. I’ve explained how FIFO works in my previous issue: http://forum.manager.io/t/exchange-rate-fifo-method/3645; could you please refer how the other two works as it’s important and a big issue for me?

Thanks. :thumbsup:


#8

As I’ve explained I’m not an accountant. I’m using the manager for Project (management) accounting and “Pure” accounting methods not always applies. As an example, in my contract with the client the is a contractual partial compensation method for price variation which is included in the project payments income and thus straight forward exchange rates means nothing from a project management point of view.


#9

OK, I think I get it where is the confusion.

There is only one method to calculate foreign exchange gains / losses. Accounting standards are very clear on this:

Foreign currency monetary amounts should be reported using the closing rate

Now for tax purposes, there are two types of exchange gains (losses)

  • Realized
  • Unrealized

This is because if you buy foreign currency and the currency shoots up in value. While you made huge currency exchange gains, you don’t have to pay tax on forex gains until you actually withdraw the money. And when you withdraw money, you can calculate your realized currency exchange gains using FIFO, LIFO or some average method.

The point is that no matter what method you are using to calculate realized currency gains (losses), it has no effect on your total currency gains (losses).

Manager doesn’t have a report to calculate realized and unrealized currency exchange gains (losses) but it’s something I will be adding in future.

The bottom line is this. What Manager is doing is correct. The issue you have is that you need Manager to separate realized and unrealized exchange gains (losses) and not lump them up into one account.


#10

Hi @lubos,

Thanks so much for your explanation. Hope we can get realized and unrealized module in near future although I’m not sure it will solve my problem. Please refer below images to understand my problem more. :wink:

It says I made two transfers with the exchange rate of 850 MMK. However, when I use 12 USD, it’s calculated with the rate of 1000 MMK. Where does it come from?

As a consequence, exchange gain(loss) comes out and that amount is also considered in Cash at Bank. Actually, it’s not what we really get, it’s just value. That exchange rate I dunno where it does come from gives me a headache.

There’re other things related to currency too. I will try to present them in screenshots.

Thanks again.


#11

Can you click on that 12.00 figure and show screenshot how that transaction has been recorded?


#12

Hi @lubos,

There’re altogether 4 records in 1st image.

I transferred 10200 MMK, which is equal to 12 USD, with the rate of 850 MMK on 1 USD. Vice versa, 1 MMK is equal to 0.00117647058 USD at the time of exchange. The issue is here - Manager calculates with rounding and it takes only four decimals. If we calculate with that 0.0012, the exchange rate would be 833.3333. I’ve even defined the exchange rate of 0.00117647058 USD with related transaction date; but it doesn’t affect. Same issue for other transactions too.

We should be able to modify the exchange rate at each exchange transaction. Is it possible and does it make sense?

Thanks.


#13

Hi @lubos,

I’ve found some new facts about exchange rate again.

  1. When I transferred USD to my SG Bank account on September 1st 2012, it was exchange rate of 850 MMK per 1 USD.


  2. I defined exchange rates on the days when we exchange currencies.

  3. Here’s the issue. When we spend some operation cost from S’pore Bank, it is calculated based on the currency rate we defined after the specific dates. In below image, all the transactions except in red box are paid from S’pore Bank. Therefore, every transactions should be calculated with exchange rate of 850 MMK till we run out of all USD that we did exchange with 850 MMK? That’s what I mean for FIFO method. Is it similar to what you say “realized and unrealized”?

Looking forward to your reply ASAP as it is urgent for me. Thanks so much again. :smile:


#14

@Aspire, I am going to try to make this point one more time. It makes no difference what exchange rate applied when you received cash, whether physical money or in a bank account. Money is not inventory. Money is only an agreed method for representing value, and its value can change.

The only thing that matters is the exchange rate applied at the time of a transaction. While you held the money, its value may have increased or decreased based on factors in the financial markets. Further, different parties involved in a transaction may obtain different exchange rates. A merchant may charge one amount for supplies in local currency. You might exchange another currency to buy those supplies and obtain one rate. If you purchase those supplies with a credit card, the credit card processor or bank usually obtains a different rate because of higher volumes and different transaction fees.

It might be convenient to think of cash you hold in one currency as having had a certain cost and, therefore, a fixed value. But that is never true. All the cash you hold in any currency rises and falls together as the value of that currency relative to other currencies rises or falls.


#15

I don’t know how to explain properly. I’m also following Accounting Rules and it works on Manual. Everything is correct. I’m now testing Manager and I believe it is very good application for accounting; however, I stuck here in different currency transactions. If this currency issue is clear, I gotta suggest my B.O.D to apply this app at my company. That’s why I’m urgently asking for help.

For reference, please refer this page: https://www.ato.gov.au/Business/Forex/In-detail/Translation-(conversion)-rules/Foreign-exchange-(forex)--use-of-first-in-first-out-method-for-fungible-assets,-rights-and-obligations/

Hope it will give you ideas what I’m talking about and I can improve Manager in some ways. Cheers.

Oh, by the way, @lubos has once also told me that Manager will be added realized and unrealized module in the future. When will it be?

Thanks @Tut. Thanks @lubos.


#16

@Aspire, don’t worry. I know exactly what’s the issue now and it boils down to making a report which will separate realized and unrealized exchange gains/losses for tax purposes because taxation office only cares about realized gains/losses.

I will try to put something together before end of this month. Then once you see the figures you expect, everything should be crystal clear to you.


#17

Thanks million @lubos. :smiley: