Switch Currencies order in Currency Exchange rates

[Brucanna]

@mauroskov

But when I pay 523.71 euro from my Euro account, I still have to convert that in RWF because that is what is going to influence my cost of goods which is defined in RWF

The exchange rate used in taking up the Purchase Invoice is what influences your cost of sales not the payment. The payment is only a transfer between balance sheet accounts - from Euro bank account and to Accounts Payable (euro supplier).

@mauroskov

For this reason finding the right way to convert my expenses in Euro is very important

Can I suggest that you work from the Purchase Invoices only by setting a middle exchange rate and not from the Payments as then you are kind of working backwards instead of forward - in that payments come after the purchase invoice.

@mauroskov

The link to the topic Importing of goods is very interesting, but I do not see to understand the whole thing.

Perhaps if you provide examples of the different invoices involved in a typical import then we can work through the entire process here.

[mauroskov]

Thank you @Brucanna and @Tut for your great support here.

This is the example…

On October 18th I bought €2.500 from a forex bureau at 1.010 RWF for €1

On October 25th I paid the supplier in Europe based on a proforma which became a purchase invoice on November 10th when the supplier shipped the goods and issued their invoice:

The purchase order includes the cost of transport that I have divided in three and attributed to three items. Based on what I read in the guides and in the forum, I have not indicated any quantity for these items again, just the total share of the transport which should then go and increase the cost of the goods as a total.

On the same date when I purchased the Euro, October 18th, I added an exchange rate of the RWF to the EUR of 0,000990099.

Once the goods landed here I paid import duties and taxes. I put the taxes for each item together and created a new purchase invoice (where the supplier is customs) as follows:

Agan no quantities, just the total amounts for each item category (not all items paid the same taxes).

Now if I look at my stock of this items, this is what I see:

However, if I take for example item number 1 my actual landed cost should be:

( €110,09 + €100 / 6 ) x 1.010 ) + ( 78.551 : 6 ) = 141.116

but as you can see Manager gives me a unit cost of 126.757 instead.

If I remove the exchange rate added for October 18th and leave only the exchange rate I added for January 1st when the year started (1 RWF = 0,001122 Euro) then the unit cost of the item goes down to 11.298 which is completely wrong.

In all this, there is no VAT indicated anywhere even though we did pay VAT to customs. The problem is that VAT is calculated on the customs’ value of the items (e.g. €110,09 using their own exchange rate of about 990) and on some taxes, but I cannot add VAT to the purchase invoice of the supplier (we do not pay VAT to the supplier) and also VAT must be in RWF not Euro.

[Brucanna]

What you have displayed looks good except my rebuild of your data gives me the correct unit cost after taxes:

Euro Suppliers Invoice

Inventory Avg Cost after Suppliers Invoice

Duties / Taxes Invoice

Inventory Avg Cost after Duties / Taxes Invoice

For the Import VAT add it to the Duties / Taxes Invoice using the customs calculation and a contra entry.
So take the Suppliers Invoice at 2.456,07 but at customs rate 0,001 to equal 2.456.070 with VAT 18%
So these two lines are added to the Invoice - note the “-” in the second line

So the Duties / Taxes invoice becomes

[mauroskov]

Wow! So what have I done wrong? Have you added any exchange rates manually?

Thank you for the tip on the VAT!

[Brucanna]

@mauroskov

Have you added any exchange rates manually?

Only the one as advised by you

Try these, 1) change the Exchange Rate date to earlier then Oct 18, I used Oct 4 for no particular reason, 2) complete the Goods Receipts so they show as “Qty on Hand” (this shouldn’t impact) and 3) delete the taxes invoice and see if our Inventory Avg Cost match, if they don’t, then the issues lie with the Euro Suppliers invoice. You could manually calculate to see what exchange rate is being applied.

@mauroskov

Thank you for the tip on the VAT!

You can also reverse calculate the Inventory RWF Value without knowing the Customs exchange rate used.
Take the VAT amount - divide by 18 and multiple by 100.

[mauroskov]

So, I tried several things. Nothing was working! But then I realised that the DATE on the euro invoice was wrong. I adjusted it and now I get the same value. Great!

And I had to have the exchange rate. Without it, even with the inter account transfer, the cost of the item is not correct.

Now, going back to the initial question of this thread, I think it would help to have the possibility to add exchange rates both ways, that is to say in my case for example 1 RWF = 0,000990099 but also 1 EUR = 1.010 RWF. It would make things a lot easier, I think.

Thank you again!