Expense Claim - in foreign currency

I frequently have expense claims in foreign currency. I record this in the currency of the claim - no problem.

But when these are to be paid, I cannot select the specific claim (like I can for purchase invoices) but only select the “payer”. Also, I can only record the payment in the currency of the bank account from which I’m paying.

Unless the expense claim is in the same currency as the bank account, this leads to that I end up with a balance in the Expense Claim liability account (due to currency exchange).

I then see no other option then to clear out this by a separate Journal Entry, which can be rather tedious as you have to do manual adjustments with the exchange rates.

Would it be possible to update Manager so that Expense Claim payments works in a similar way like payment of Purchase Invoices - i.e. that you will select the specific expense claim that you will pay and (if that is in different currency from the bank account) you will be able to record the amount both in the currency of the claim as well as the currency of the bank account (and the exchange rate difference is automatically moved to the foreign exchange gain/loss account)…?

I notice that this topic has been discussed earlier in the below thread, but as that was very long time ago I thought it would be best to start a new thread.

The above is (for me) the most important upgrade request for the Expense Claim feature, however I would also like to see the possibility to report specific line items (in an expense claim) in the currency of that expense, with the possibility to (manually, as this may be a credit card rate or cash exchange rate) add an exchange rate after which this line item is automatically calculated to the currency of the whole expense claim report. (A feature that is very common in travel expense claims).

Basically something like;

Description Amount paid Exchange Rate Amount
Hotel expense USD 150.00 1.456 218.40
Train ticket SEK 800.00 0.234 187.20

That is because you are not paying a specific expense claim, even though that may be the purpose of the payment. You are paying off a liability in the Expense claims account. That account is not divided into subsidiary ledgers like Accounts payable is for suppliers.

True, because that is the currency in which you are paying. Any foreign-denominated expense claims have also been converted to your base currency in the Expense claims account. And payments will be posted to the Expense claims account in your base currency, regardless of the currency in which they are paid.

You need to figure the equivalencies first. And you have to accept that operation in multiple currencies will inevitably result in foreign exchange gains/losses as exchange rates change.

I don’t think so. Purchase invoices are recorded in the currency of the supplier. They are paid in the currency of the bank or cash account. So there is only one exchange rate applicable at the moment of reimbursement, which is the single multi-currency transaction. In Manager, you can force equivalence between the payable and the payment, and the program calculates the effective exchange rate.

The sort of expense claims you describe have the currency of the merchant from whom the expense claim payer bought something (call that A), the base currency of the business into which the claim is converted (B) in the Expense claims account, and the currency of the cash or bank account from which the claim is reimbursed (C). So you have three exchange rates involved: A-B, A-C, and B-C, all moving independently. While you might force equivalence at any given point in the workflow, there are three separate transaction points spread out in time. You cannot reasonably expect all three exchange rates to remain fixed.

There are some workable options to simplify things, several of which I describe below. All still require considerable work, but they reduce the number of exchange rates and conversions involved. They are not intended to all be used simultaneously:

  • Require that expense claim payers submit claims in the base currency. This may mean they need to wait until credit card transactions are cleared and converted. In fact, it might require use of personal credit cards denominated in the base currency of the company.
  • Require expense claims to be submitted in the currency in which they will be reimbursed. Many of the problems mentioned above will still be encountered.
  • Require cash expenditures in foreign currencies to be documented as conversions from either the base currency or the reimbursement currency. It is simpler if this can happen only once per trip.
  • Prohibit cash transactions on expense claims, requiring all expenses to be converted by the card processor to either the base or reimbursement currency.

Expense claims can be complex to start with, because transactions are occurring outside the accounting system of the business. Foreign currency purchases make them at least twice as complex. Foreign currency reimbursements probably make them four times as complex. Speaking from experience, a travel expense claim entirely in my base currency takes a few minutes to process. Adding some cash conversion at the airport and a few foreign credit card charges can easily turn that into an hour, after waiting a week for charges to clear. All the extra time happens outside Manager.

Thanks for your extensive reply. Some clarifications below:

Fully understood. In essence, my “proposal” (or question) is if this could be changed so that expense claims would work with subsidiary ledgers, just like the “Accounts payable” account. This basically means that when creating an “Expense Claim payer” a currency is provided (just like we do for “suppliers” and this then creates a separate “subsidiary ledger” for this expense claim payer.

Yes, of course.

I don’t expect Manager to manage all 3 exchange rates. My proposal is that it would only handle B-C (i.e. similar to Accounts payable). In other words, the conversion of the "Expense Claim Payer’s base currency (B) to the currency of the bank account from which the reimbursement is done (C).

In my second posting above, I simply propose that the Expense claim feature could have an additional column to make the creation of the expense claim easier (and also improve the readability of it later on) when the currency of a specific line item (A) is not in the currency of the claim (B). Manager could just help in converting this (as per an exchange rate given by the user) to currency B. In the ledger, only the amount in B is recorded. (I hope you get my drift).

Totally agree, especially as there is in essence no difference between a Purchase Invoice and an Expense Claim - both come from a third party.

I will put this into the Ideas Category.

@AnBe, alternatively you could setup the “Expense Claim Payer” as a Supplier (as there is no restriction) and then you use the already existing features as you have so clearly illustrated.