I have set base currency as SLR and have some suppliers and customers who deal in USD. I want to update a purchase invoice created in USD with Freight-In values in SLR. How can I do this.
You cannot. You will need a separate purchase invoice, selecting a supplier denominated in SLR. If the same supplier sends you invoices in different currencies, you must create that supplier as two different ones in Manager, one each currency.
The reason is that each supplier’s Accounts payable register is converted to your base currency using a single exchange rate. If you could mix and match, the Accounts payable balance would go up and down with exchange rate fluctuations.
Updating a past purchase invoice with new charges is poor accounting practice at any rate. The first purchase invoice should match the sales invoice the supplier originally sent. If they send another, that is a different transaction. Combining them could create confusion in the future.
Although you did not mention this, the freight charges may actually be from a completely different supplier. In that case, you need a separate purchase invoice regardless of currencies.
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Thank you. It is for the goods I pay in USD and freight-in is for customs duties etc which I pay in SLR. I want to add the duties and other costs to the product cost. I guess I need to convert to a single currency to do this.
Yes you can do it, you just need to do the freight-in transfer via a clearing account
Read this topic it has a worked example Importing of goods - #36
@christopher, just note that that topic was before “Localisations”, so the customs tax treatment maybe different.
No, you do not. You need to create purchase invoices for suppliers denominated in the correct currencies. Once again, you were not quite completely clear, but it appears you bought goods from a supplier doing business in USD and got a customs bill from your authority operating in SLR. In that situation, you cannot possibly combine the two on a single purchase invoice, because the transactions were with two separate entities.
The situation of separate freight-in charges is covered in this Guide in detail: https://www.manager.io/guides/9610. See the section on Entering separate freight-in charges.
Thanks,Tut. Yes, I read the guide and inserted the new lines in the purchase invoice but it was incorrect because of different currencies. I will study the “importing of goods” case suggested by
Brucanna. I should be able to solve this because this case is similar to mine. Thanks again.
@christopher, be aware that the Guide state limitations which actually don’t exist.
Such as: Both the original supplier and the separate freight-in supplier are denominated in the same currency.
In fact you could have three purchase invoices in different currencies.
Supplier - currency 1
Freighter - currency 2
Clearing Agent - currency 3
All can be handled via the clearing account process.
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I have been using this approach successfully for a while now, with two currencies. In my case it becomes a little more complicated because I only receive the invoice with clearing costs weeks or months after the original supplier invoice, which means exchange rates have fluctuated and I have to be careful how I calculate the Freight-in figures that I enter on the supplier invoice. But I eventually set up an external spreadsheet to handle these calculations, and it’s fairly easy to manage now.
Thanks. So, I have to convert the original purchase invoice which is in USD to the base currency before other charges could be added.
No, you do not. The program handles different currencies, depending on the denomination of the supplier. The point is that you cannot combine different currencies on the same purchase invoice. But you can purchase inventory or record freight-in costs in different inventories by virtue of paying different suppliers for the goods or costs in different currencies. The program will convert the differently denominated transactions to base currency for presentation in the Inventory on hand account.
That limitation was added to the Guide for clarification in December 2019 after problems were reported with mixed currencies. Can you explain why you now think this limitation does not apply? In fact, in the forum topic you linked to above, you wrote, “Normally the Freight-In feature can be entered as one line and Manager will spread the cost over multiple items but that’s in the same currency.” [Emphasis added.)
That statement is hard to reconcile with your recent one that currency matching is not a limitation. The method in the Guide explaining the process of posting freight-in charges via a clearing account refers only to entering identical (not converted) amounts for the freight-in costs in all places. (Recall that this was added to the Guide at your insistence in November 2017.) The two-step process is described in the Guide as follows:
Step 1 is to post the freight-in charge to the clearing account via a purchase invoice that would have to be denominated in the currency of the freight supplier.
Step 2 is to add two lines to the original purchase invoice (which is in the currency of the goods supplier, not the freight supplier). To do this, the freight-in cost must be in the currency of the goods supplier.
Now, you might manually convert the freight-in cost to the goods supplier’s currency before entering the two lines on the goods purchase invoice. But the clearing account would still contain the transaction in the freight supplier’s currency. So the balance of the clearing account would change with exchange rate fluctuations. The point of the method was to zero the clearing account, and I don’t see how that can be permanently accomplished when you have different currencies involved.
My method is:
- Receive supplier invoice in ZAR.
- (weeks or months later) Receive goods, together with freight/customs clearing invoice in ZWL, my base currency.
- Allocate the expenses from the freight/customs clearing invoice to the custom “Freight clearing” clearing account.
- Calculate the amount in ZAR of the total costs from the freight/clearing invoice, using the exchange rate from the date of the supplier sales invoice.
- Edit the original supplier invoice (which was in ZAR and stays in ZAR) to include: (a) a line with the Freight-in charge as calculated in 4 above, in ZAR; (b) a line with the negative of this amount allocated to the custom “Freight clearing” clearing account.
If you have done everything correctly, the negative amount in 5(b) above cancels out the positive amount entered in 3 above. If you have a non-zero amount in the custom “Freight clearing” account, something has been done incorrectly.
Because I use exchange rates that change daily, and sometimes use a third currency too, I set up a spreadsheet to do the currency conversions for me so I know what amount to enter into the original supplier invoice for the Freight-in charges. If you receive both invoices at the same time, or the exchange rates haven’t fluctuated in the interim, you probably won’t need to do this, and can just use the exchange rate you have set in Manager.
I’m sure others will use similar or different methods, but this seems to accomplish what I need. Of course, it would be nice to have Manager handle all the conversions internally and not have to use the spreadsheet, but from my reading of the guides and forum I suspect there are not many users who would see this as a valuable allocation of development resources.
@GrahamvdR, what you are doing with your external currency conversion is assuring that the currencies for the goods and freight suppliers are effectively the same, thereby satisfying the limitation. A possibly easier alternative is to wait until the charges actually clear your bank (if you are relying on your bank to perform the conversions) and enter the actual amount of the bank transaction in your base currency. Of course, if you have a foreign currency bank account, that won’t work.
@Tut Correct. Unfortunately it is a complicated arrangement: my base currency is ZWL, my foreign suppliers charge in ZAR, my bank pays this from a USD account into which I have to deposit USD cash, and the freight-in charges are a combination of ZAR on the original supplier invoice and ZWL (and sometimes also USD) on a separate invoice. I use the bank’s conversion from USD to ZAR for the payment of the supplier, but as far as I can tell I need to do the conversions for freight-in manually where it is entered in ZAR on the supplier invoice from payments made in ZWL (and sometimes also USD) at a later date.
Here is a simplified example:
Sales invoice SI#001 received from supplier on 01/03/2020, with exchange rates at:
ZAR:USD = 15
ZWL:USD = 18
ZAR:ZWL = 0.833333
| SI#001 | 01/03/2020 |
|---|---|
| Goods | ZAR 10,000 |
| Courier charges | ZAR 1,000 |
| Total | ZAR 11,000 |
Sales invoices SI#002 and SI#003 received from freight company on 01/04/2020, with exchange rates at:
ZAR:USD = 20
ZWL:USD = 25
ZAR:ZWL = 0.8
| SI#002 | 01/04/2020 |
|---|---|
| Duty on goods | ZWL 5,000 |
| Clearing fees | ZWL 500 |
| Total | ZWL 5,500 |
| SI#003 | 01/04/2020 |
|---|---|
| Duty on goods | USD 20 |
| Total | USD 20 |
When I enter SI#002 and SI#003 into Manager, I allocate the charges to my “Freight clearing” clearing account. It then has a balance of ZWL 5,500 from SI#002 + ZWL 500 from SI#003 = ZWL 6,000.
When I enter this as a Freight-in charge on SI#001, I need to calculate the amount in ZAR that would exactly offset the ZWL 6,000. So to do that, I convert the USD amount from SI#003 to ZWL (my base currency) at the rate on the day SI#003 was issued, which gives ZWL 500. I then convert both ZWL amounts to ZAR at the rate on the day SI#001 was issued, which gives:
SI#002: 5,500 / 18 Ă— 15 = ZAR 4,583.33
SI#003: 500 / 18 Ă— 15 = ZAR 416.67
Total = ZAR 5,000
which I then enter into SI#001:
| SI#001 | 01/03/2020 |
|---|---|
| Goods | ZAR 10,000 |
| Freight-in (Courier charges) | ZAR 1,000 |
| Freight-in from SI#002 | ZAR 4,583.33 |
| Freight clearing account | ZAR -4,583.33 |
| Freight-in from SI#003 | ZAR 416.67 |
| Freight clearing account | ZAR -416.67 |
| Total | ZAR 11,000 |
This clears the “Freight clearing” account to ZWL 0, and I have my freight-in charges distributed across my inventory items.
I could, of course, combine the amounts from SI#002 and SI#003 when I enter them into SI#001 above, but I like to keep them separate like this for helping me track and verify all the costs.
Note, however, that I don’t work backwards from the “Freight clearing” account to work out how much needs to be offset in the original sales invoice. I do the calculations manually using the amounts on the freight invoices and the exchange rates on the relevant days, and only use the “Freight clearing” account as a check that verifies my calculations. If it has a non-zero amount then I’ve made a mistake somewhere.
Yes, by simply reading and understanding your comment in Post #6 “You need to create purchase invoices for suppliers denominated in the correct currencies”.
For example, if your Inventory Supplier invoice is in Euros and the Freight Supplier invoice is in USD and the Clearing Agent’s invoice is in the base currency then each Supplier within Manager would be denominated with their respective currency.
Thereby taking your comment’s extract “denominated in the correct currencies” (which is right) and comparing that to the Guide’s extract “denominated in the same currency” you have a conflict and hence the comment “the Guide states limitations which actually don’t exist”.
Note the very first word of the quotation - “Normally”. But let me truncate that quotation for your clarity "Normally the Freight-In can be entered as one line but that’s with the same currency” or “Normally entered as one line when its the same currency”. That is, when you don’t have the same currency it can’t be “normally” entered on one line.
That is because you have either misunderstood or are mispresenting the quotation. Hopefully the above explanation has cleared that up for you.
WHY ??? The Manager Guide should be the go to source for all aspects of Freight-in, yet when it comes to importing & multiple currencies the Freight-in Guide is silent. Instead, Users currently have to rely upon the Forum Topic “Importing of Goods” as their de facto Guide.
It is unbelievable that a Forum Topic gazumps a Manager Guide as the primary source.
WHERE ??? I have read and re-read the Freight-in Guide using the link provided in Post #6 above and I can’t find the above two points anywhere. In fact, I can’t find in the Guide any reference to either importing or currency, yet your points above clearly refer to currency…
No it doesn’t, and this is has been your continual stubbing block. The clearing account is cleared based upon the exchange rate used for the related inventory suppliers invoice. The inventory suppliers invoice’s exchanged rate doesn’t change (unless a user back dates an exchange rate) so therefore the clearing account balance also doesn’t change either.
Then you need to read and reread @GrahamvdR excellent illustration and their comments in post #15. Here is a User who lives and breathes importing & multiple currency Freight-in. Perhaps you will accept their assertions as over the years you have repeatedly rejected mine.
Furthermore, there are any number of Manager Users doing importing and have used the “Importing of Goods” topic as their Guide since 2016 and none have reported any structural flaws with the advocated process or having any clearing account balance issues. That should probably speak louder to you as to the success of the approach than anything I write.
In the past I have strongly advocated that the Freight-in Guide needs to be re-drafted as it is currently illogically structured and that it needs to remedy the total neglect of information on importing and multiple currencies, that is, if this Guide is to be the preeminent go to source for Manager Users for Freight-in rather than relying on a Forum Topic which doesn’t get updated as Manager upgrades with new versions…
You are misconstruing my comment. In post #6, I was responding to @christopher’s supposition in post #3 that he had to convert to a single currency in order to separately add duties and other costs to product costs. My post #6 told him that he did not need to convert to a single currency, but only to create purchase invoices in the correct currencies. In other words, I was highlighting the difference between one currency and correct currencies.
No, you do not. The correct currencies are being used when the currency for a purchase invoice of goods is in the same currency as a purchase invoice for freight-in costs. There is no conflict in what I wrote.
The Guide lists the following as a requirement, “Both the original supplier and the separate freight-in supplier are denominated in the same currency.” This is exactly the point you are disputing, saying those words constitute a limitation that doesn’t actually exist. So how can you claim the Guide is silent on the subject of multiple currencies? You contradict yourself.
Right here, in this screen shot directly from the Guide. The portion corresponding to Step 1 I’ve underlined in red; the portion corresponding to Step 2 in blue:
If you have further revisions to suggest, I hope you will submit them in a private message to the list of moderators. As you know, that Guide has been a collaborative effort between the developer and moderators from the beginning. In fact, the entire section on use of clearing accounts for automatic freight-in allocation was added at your suggestion in November 2017.
Correct, but that advise is in conflict with the Guide’s “Both the original supplier and the separate freight-in supplier are denominated in the same currency”.
That is, the Guide’s stated “denominated in the same currency” implies “single currency”.
Whereas, the above advise clearly states “did not need to convert to a single currency”.
Accepted, so that “one currency” implies same currency and “correct currencies” implies one or more currencies" If so, then isn’t this next comment contradictory:
The opening “correct (one or more) currencies” comment becomes restricted by the later “is in the same (one) currency”. That is, how can you convert purchase invoices that are in correct (one or more) currencies into being just purchases invoices of the same (one) currency.
What about the situation where the currency for a purchase invoice of goods is in a DIFFERENT currency to a purchase invoice for freight-in costs. How does this importing of goods situation of multi currency purchase invoices fit in with the Guides stipulation of being “denominated in the same (one) currency” ?
Quite simply:
1 - The Guide clearly stipulates that “Both . . . . are denominated in the same currency”.
2 - The dictionary’s meaning of “same” is - identical, not differing from one another.
3 - The dictionary’s meaning of “multiple” meaning is - consisting or involving more than one.
4 - The Guide’s usage of the word “currency” is in the singular form, rather than the plural form “currencies”.
5 - The Guide’s lack of reference to and illustration of multiple currencies purchase invoices.
6 - Users reliance on the Forum topic Importing of goods, rather than the Guide
Yes but it was only 50% implemented, the other 50% covered by the Forum topic wasn’t.
Part 1 - separate purchase invoices for goods and freight-in in SAME currency - implemented.
Part 2 - separate purchase invoices for goods and freight-in in DIFFERENT currencies - not.
Part 2
1 - Goods purchase invoice from supplier entered as their currency - say Euros
2 - Freight purchase invoice from supplier entered as their currency - say USD
3 - Landing Charges purchase invoice from supplier entered as their currency - say AUD
So at this point you have 3 purchase invoices entered in 3 currencies - not at SAME currency.
Invoices 2 & 3 get posted to the clearing account in the BS at base currency values.
The clearing account base currency value gets converted to Euros using the exchange rate applicable to Invoice 1 and then gets added to Invoice 1 per the extra two account lines.
Result - the different currency freight-in charges are re-distributed over the Goods invoice.
Now I have read the Guide numerous times and I can’t find any reference to:
a - Entering purchase invoices in their “original” currency, it only refers to “same currency”.
b - Converting the clearing account values at an exchange rate to match the Goods invoice.
Until it does the Forum topic will always gazump the Guide in the multiple currency aspect.
And I guess that is the stumbling block - your lack of confidence in the process.
Let me put it this way, the Forum topic has had 4.1k views, so I am going to assume that out of those there are hundreds of Manager Users who are importing goods and facing freight-in charges all in different currencies - therefore they will all be using the above outlined process.
Not one has complained about the clearing account not zeroing, even those with very complicated situations as outlined in post #15 - Inv I in ZAR, Inv 2 in ZWL and Inv 3 in USD - where they state “This clears the “Freight clearing” account”.
I am having trouble conveying my point to you. So I will try to rephrase things without using the terms single, same, or correct. The misunderstanding I was originally trying to address was the mistaken belief that—if you want to use the automatic freight-in allocation—you can only use one currency anywhere in Manager. You can, of course, use as many currencies overall as are necessary to accommodate your suppliers, customers, employees, bank accounts, etc.
However, the currencies of a purchase invoice from a goods supplier and a purchase invoice from a freight-in supplier must match one another if you want to use automatic allocation. If you want to allocate manually, they do not have to match. This stems from the fact that, when you modify the goods purchase invoice to zero the clearing account, the freight-in charge ultimately ends up on the goods supplier’s invoice. Therefore, it must be in the goods supplier’s currency, whatever that may be. If it is not, the transferred freight-in cost and the offsetting post to the clearing account will not be equal. And that would change the balance due on the goods purchase invoice, which can only be in one currency.
Such mismatched purchase invoices are not suitable for automatic allocation for the reason explained above. Further, the stipulation applies only to the applicable goods invoice and corresponding freight-in invoice. It does not restrict other corresponding pairs from being in a different currency, providing the currencies of the goods and freight-in invoices match, in other words, that the currencies indicated on the two invoices are identical. And please do not get twisted around on whether selections on invoices that both choose a specific currency should be referred to as the same currency (singular), or identical currencies (plural). That simply does not matter.
The Guide does not illustrate multiple currencies because they do not work for automatic allocation. And for manual allocation they are not an issue. Presuming you set up your suppliers, bank accounts, currencies, and exchange rates properly, you can use manual allocation without the need for a clearing account. The program will take care of all the currency conversions for you. So there was no apparent need to address multiple currencies beyond the stipulation that goods and freight-in purchase invoices should be “denominated in the same currency.” The connotation of the same currency as each other seems obvious.
You were referring here to illustrating the situation with multiple currencies. I agree that some users might find such an example informative. But I must point out, no matter how many forum readers have viewed the topic, the thread on Importing of goods - #36 does not contain the worked example with multiple currencies you have often claimed it does. Your only relevant example in that entire topic (post #2) suggests waiting until all payments have cleared the base currency bank account before entering base currency amounts. That is what you illustrated—a single-currency automatic allocation. Your contributions to that topic did not include anything else about multiple-currency freight-in situations. In fact, most discussion was about VAT issues.
If you believe illustrating automatic freight-in allocation with suppliers operating in multiple currencies is important, I renew my invitation to submit a draft Guide revision to the moderators.
This assertion of yours (which you repeatedly make) is completely FALSE, and is in fact baseless and hence why the Guide is misleading with that limitation.
Please re-read post #15 very s l o w l y as that User has not only provided an excellent illustration of a real world situation it also totally and utterly contradicts your assertion as they have clearly detailed how they have used a) multiple currencies, b) the clearing account, and c) automatic allocations.
I refer you to their comments “This clears the “Freight clearing” account to ZWL 0, and I have my freight-in charges distributed across my inventory items” and “If it (the clearing account) has a non-zero amount then I’ve made a mistake somewhere”.
That is correct, however, it is how you calculate that modification value is the key to the multiple currencies plus automatic allocation process working and that key is explained here “The clearing account base currency value gets converted into the Suppliers currency using the same exchange rate as applied to the goods suppliers invoice and this converted value then gets added to the Suppliers invoice per the extra two account lines”.
Your other repeated false assertions grouped together:
a - “Such mismatched purchase invoices are not suitable for automatic allocation”
b - “providing the currencies of the goods and freight-in invoices match . . . are identical”
c - “The Guide does not illustrate multiple currencies because they do not work for automatic allocation”
d - “the stipulation that goods and freight-in purchase invoices should be “denominated in the same currency”
S O R R Y, the entire topic is based upon one particular User’s multiple currency invoices and it also includes direct links to other topics such as Freight-in which are to be read in conjunction with that topic, that way their content didn’t need to be specifically repeated.
Furthermore, re-read post #7 where the originator of this topic commented:
1 - I read the guide and inserted the new lines in the purchase invoice but it was incorrect because of different currencies.
2 - the “importing of goods” case. I should be able to solve this as that case is similar to mine
That response should have set off alarm bells - why did the Guide fail yet the topic solve.
Anyhow. to resolve all this I will “simplify” that’s topic’s worked example just for you. Noting that the processing method for the “same currency” as per the Guide and the “multiple currency” is identical except for one additional step.
Example A - The Invoices
1 - Goods purchase invoice from supplier entered as their currency - say Euros
2 - Freight purchase invoice from supplier entered as their currency - say USD
3 - Landing Charges purchase invoice from supplier entered as their currency - say AUD
So you have 3 purchase invoices entered in 3 currencies
Invoice 2 gets posted to the clearing account with a base currency debit of X value
Invoice 3 gets posted to the clearing account with a base currency debit of Y value
Values X + Y = Z. This base currency Z value gets manually converted into Euros at the same exchange rate as used for Invoice 1 and then gets added via the additional two lines. This euro converted value of Z gets posted back to the clearing account as a base currency credit Z value - so the clearing account is ALWAYS zeroed out.
Further noting that the Guide’s “same currency” doesn’t necessarily need to imply “base currency”.
Example B - The Invoices
1 - Goods purchase invoice from supplier entered as their currency - say Euros
2 - Freight purchase invoice from supplier entered as their currency - say Euros
Base currency USD. Therefore even though both invoices have been “denominated in the same currency” IF they haven’t been processed using the exact same exchange rate, then the clearing account’s Z value must be cleared by using Invoice’s 1 exchange rate.
Generally, when using the clearing account for any freight-in, even base currency, the clearing account’s Z value (for that goods invoice) MUST ALWAYS BE USED, unless you have particular complicated exchange rate situations, as in post #15, then working from the invoices maybe required…
Especially noting the fact that in the above examples - automatic allocation - has been used
Therefore. @tut, here is the challenge. Why don’t you model the examples in one of your test businesses and report back if you discover any material flaws via fully detailed screenshots. Would 7 days be sufficient time, otherwise looking forward to the Guide being updated with the inclusion of multiple currencies.
If you mean the full guide, with pleasure.