Foreign exchange gains/losses

[mauroskov]

Hi @Brucanna

Thank you for your help. Sorry for the delay but I had to study your response a bit. It all makes more sense now.

@Brucanna

Create a mid rate for a period (week, month, quarter, year) and process all Purchase Invoices to that mid rate

This would be helpful, but then the actual cost (and hence several things including the cost of goods sold and ultimely taxes) will not be precise. Right?

@Brucanna

…and then review those rates at the end of each period.

What do you mean by reviewing the rates? Go in and update the exchange rates with the actual ones? Isn’t it easier to use the right rates from the beginning?

@Brucanna

Therefore going back to your screenshot where you only have purchase invoices and no bank transactions shown, how you managed to create forex variations from just purchase invoices is unknown unless its due to all your individual purchase invoice exchange rates being in conflict with each other as both invoices are unpaid (via the closing balance being there) yet there exists a forex variance. (???)

Yes, none of the invoices have been paid yet in my simulation, and this is because in a previous post (Switch Currencies order in Currency Exchange rates - #26 by mauroskov) I had understood that there was no need to use exchange rates for payments. So yes, I guess the gains/losses is based on the different exchange rates I have used for the several purchase invoices.

Overall, If I understand it correctly, I should add for example an average quaterly official EURO/RWF exchange rate (e.g. from the central bank or maybe the rate used by customs when we imported) for the date of each Purchase Invoice (or even the specific official rate on the date of each Purchase Invoice) and then add exchange rates based on our actual purchase of forex for the dates in which the Purchase Invoices were paid?