Hi. I need your help in solving unknown foreign exchange gains. I have put exchange rate correctly in settings. Could anyone assist me to remove unexpected gains please?
Why it’s unexpected? I’m pretty sure the calculations are correct but what Manager is missing is some worksheet which will justify those entries.
You will need to provide more information about the transactions involved.
But generally exchange rates apply to Sales Invoices rather then Cash Receipts.
You can’t have different exchange rates for related transactions - a sales invoices and its cash receipt.
@lubos I have put all rates correctly. How did I end up with exchange gains?
@Brucanna I am just wandering how I gained this foreign exchange gains? I provided all related information in the post. What else do you think I should have attached?
Let’s see… can you click Edit on that receipt from 14-08-17 and post screenshot of it? (you can hide personal info you don’t want to show on screenshot)
So let’s do the math.
The receipt shows you have received 16,98,085.75 in base currency.
Then you have explicitly stated you want this amount to be equivalent of $21,080 in foreign currency.
According to your exchange rate as at 14-08-17, $21,080 equals 21,080 / 0.01241477451 = 16,97,976.87
But you have received more than that. Receipt of 16,98,085.75 means the difference is your currency gain = 16,98,085.75 - 16,97,976.87 = 108.88
This is exactly what Manager has calculated.
Thanks @lubos for correcting me. That was definitely my mistake in calculating. However other two gains still aren’t matching with corrected exchange rates.
Aside this, I am wandering why we should input exchange rates under setting > exchange rates manually. The exchange rates could be automatically calculated by Manager based on the base amount and USD amount (which currently is optional) could be input in receipt. This would eventually save tons of our time and would be less confusing for sure, trust me
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Your previous posts answer your own question. The manual input did not occur until you entered the receipt after you were paid. Meanwhile, your invoice had already been entered. Manager needs a way to calculate equivalent amounts in different currencies in order to present information on your balance sheet. If there were no exchange rate until you received payment, your financial position would be misrepresented. (Even as is, there is a slight misrepresentation because you don’t know the exact exchange rate until a transaction clears.)
The point here is that when you enter receipts there is no need for you to enter an exchange rate under Settings. As you are entering two actual currencies - base currency 16,98,085.75 and other currency 21,080 - so Manager knows what that exchange rate is by calculation.
Because of the timing differences between the Sales Invoice and the Receipts.
You send an Invoice for USD 2,000 to your customer. You have an exchange rate entered as 0.0129. Therefore your P&L income account is going to show in base currency 155,038.75.
Subsequently your customer pays USD 2,000 but the bank converts that receipt to only 155.000.00.
Therefore that difference between what Manager thinks you are going to get for that Sales Invoice (155,038.75) and what Manger is told that you actually got for that Sales Invoice (155,000.00) is shown as foreign exchange gain or loss.