DESKTOP EDITION CLOUD EDITION SERVER EDITION GUIDES FORUM

Handling overpayments when invoice and bank account are of different currencies


#1

My base currency and bank account is in AED but one of my vendor is USD (I already selected USD currency for this particular vendor)

I’ve created purchase invoice for $61,050 USD, then I clicked on spend money button and selected AED bank accont.

After paying supplier, Manager is indicated I’ve overpaid $4.58.

Can I transfer that $4.58 as bank charges? If yes, how can I do that?


Purchase invoice in foreign currency paid from USD bank account
#2

Technically $4.58 is your currency exchange loss. In future there will be better way to handle this, for now, just create new journal entry under Journal Entries tab.

  • Debit account Accounts payable for $4.58
  • Credit account Currency gains/losses for $4.58

#3

I can see currency gain(loss) in summary tab, but not in journal entries.

I can see only sales and interest received under income section in journal entries. So, for now I did like this:

  • Account payable : credit :usd 4.58
  • Bank charges : debit : usd 4.58

It got transferred to bank charges under expenses.

Is there any way to just remove that $4.58 from my accounts. I just don’t want to add that amount to my income statement. Anyway of journal entry or something, so this manager application will forget that $4.58 USD.

I don’t know, I’m new to business & accounting world, I’m still learning.


#4

$4.58 is your legitimate expense. It belongs on your income statement and it will reduce your profit subject to income tax, which means less tax to pay at the end of the financial year.

No, there is no journal entry that can make disappear $4.58 from books. It can only be transferred to some other account. This is beauty of double-entry accounting.

If you want to learn more about accounting equation, have a look at AccountingCoach website


#5

I’ve just had a look at this, I thought it would be what I required for my multi-currency problem. However, in the journal entries I cannot see the Currency gains/losses in the drop down menu but when I check in the chart of accounts it is there.

Any ideas? Many thanks.

Update: I created journal entries (my first!) as you described earlier in this topic. Because the currency gains/losses is not available in the drop down menu I credited Sales for the time being as the income account. So far, so good. The interesting thing is that for my transaction of $158, on the books, I appeared to have overpaid the supplier by $4.24. Once my journal entries were complete, my $4.24 difference appeared in Sales (£2.49) and in the Currency Gains/Losses appeared my infamous £0.01 loss!

Just like to keep you on your toes. :smiley:


#6

Hi - We are having a similar problem…
We owe our supplier GBP £20,405. We have paid them from our EUR bank account and the amount taken from our account is EUR €25,730.70…
So our supplier received GBP £20,405.00 and we spent EUR €25,730.70.
However, the purchase invoice shows a payment of GBP £20,578.99 - an overpayment of £173.99.
We are unable to use a journal entry to move the overpayment to "Currency gains (losses)"
because the account “Currency gains (losses)” appears to be locked and does not accept journal entries.
Is there any way to unlock the account? Is there another way to deal with this issue?


#7

Just to let you know we are now fully committed to Manager and the first year’s accounts from Manager are going to our accountants this month for our year end.

As a work-around, we have created an income account “FOREX Balance” that we are using to journal out the differences between what we paid for our foreign currency transactions compared to what Manager thinks we should have paid. We keep our exchange rates up-to-date by entering the daily mid-market rates from xeTrade. This is generally working and acceptable.
However, Manager appears to be also posting amounts to “Currency gains (losses)” for the same transactions. This is causing a few problems, because, since we can not drill down into transactions on “Currency gains (losses)”, we are unable to associate these automated postings with our transactions.
It would be very helpful if we were able to see the full detail of what is happening in “Currency gains (losses)”


#8

I’m currently working on fixing this issue with multi-currency. It will be possible to override exchange rate on transaction level. This will eliminate need for journal entries.

After that, two more improvements will be added.

  • Automatic download of exchange rates from the Internet to avoid manual entry
  • Better descriptions in general ledger to explain movements in Currency gains (losses)

#9

Great news… thanks.


#10

HI,

when can we expect the improvement in multi-currency module?

for some companies we need to enter exchange rate manually which will be very little profitable exchange rates (because these are premium customers to bank) and some companies with common exchange rate but little higher than what we see on XEcurrency .

i know it will be very complicated if i explain my requirements, but still i have to mention.
Different charges for example

  1. Bank - AED to Bank - USD (1 usd = 3.674)
  2. Bank - USD to Bank - AED (1 usd = 3.67)
  3. Bank - AED to third party Bank - USD (customers or vendors bank accounts) (1 usd = 3.674)

and i have small suggestion:
purchase invoice in USD

and spending money for that invoice:

in this way
if i want to pay 20000$, i will type myself AED 73480.
if i want to pay 15000$ i will type my self AED 55110.
or
if we have exact conversion rate we can just mention $1 = 3.674 AED


#11

when can we expect the multi currency update…
hope above idea will solve the issue


#12

It’s not the solution I have in mind, mostly because some transactions might involve more than one foreign currency. Anyway, I’m planning to resolve this issue by end of this week.


#13

thank you