I’m using transferwise a lot these days for currency transfer. Days later they’ll deposit excess funds into my account that were not required to settle the transaction.
They are not really refunds. How do I record them? Inter-account transfers seems messy…
I also use transferwise. You need to setup multiple currencies and pay your bill in the foreign currency and put the exchange rate of the day the transaction goes through in. What I would do is create a purchase order with the foreign currency, pay the bill through transferwise and when the exchange goes through put the exchange rate in. This way everything will balance! You don’t have to record that £12 went out and £2 came back in for your Manager accounts. As long as you record that you ultimately spent £10 and you accomplish this by using multiple currencies. Works for me!
Transferwise is brilliant for exchange rates so I am happy to overlook the issue with excess funds.
Wouldn’t you deposit those funds directly against the expenses account of the goods/services you were paying for, treat it as though you got a cash discount. Don’t try an amend the original entry
Haven’t used transferwise, but have used this forex group consisting of UKforex, NZforex, OFX (was Ozforex) and others. Up to a set figure value a flat fee applies then there is no fees above that. When creating the transaction you pay exactly the right amount in the local currency - no refunds and no needing multiple currencies in Manager. Their rates are much better then any banks,
Also, if you have a future large value to transfer, you can book future transactions in advance if exchanges rate move/spike favourably.
Thanks Brucanna, you’re right, depositing those excess funds into the expense account it first came from is the right idea for me.
I think I understand what you’re saying dalacor, but is perhaps a bit too cumbersome for me to follow.
Just be aware that by using Brucanna’s method you are effectively recording payment as £12 even though you transfer £2 back into the account to use my example figures. But your purchase invoice shows as £12 instead of £10 which skews everything - such as cost of sales. If you find this method easier then use that as the simplest method is the best method. I actually think that this method is a cumbersome to follow as the purchase invoice never matches the actual cost of goods and you are transferring money back and forth. Anyway - glad that you got something that works for you.
A very valid point. The returned excess funds usually don’t amount to more than €10 a time. And by using the simple method I might be storing problems for later…
@dalacor I can’t see the problem that you are seeing. If you had an invoice for 12 and either
So nothing skewed, for any other expense its much more simplistic. I guess the question that arises, is it treated as one transaction or is it two separate transactions. Ignoring the forex aspect - if any invoice is paid and there is a subsequently amendment, does this make the original invoice/payment incorrect. I guess one can be pedantic to the last cent/penny, but based on @Sans_Souci comment " don’t amount to more than €10 a time" the percentage to the transaction value must be minuscule
An alternate approach (if getting the invoice right is so important) would be to amend the invoice with an extra line entry equalling the difference which is posted to a Transferwire Clearing account. Then the actual bank account amount is also posted to the Transferwire Clearing account so it zeros out.
@Sans_Souci how by using the simple method can you be storing problems for later?
I guess the thing that I can’t grasp how can these variations even occur. From decades of transferring funds around the world - I have never had one instance of variation. Aren’t the currency buy/sell locked in.
I prefer my approach as there is one transaction. With your approach @Brucanna you basically have two transactions and its harder to keep track of what was spent per transaction if you don’t amend original invoice. I am not really worried. If your approach works for you, then thats great. I find my approach works better for me - in the end all roads lead to Rome!