Entering foreing currency amount in payment

For example , I have to 34000 USD (X)  to a supplier. For that the bank make me pay 22,258.11 (Y) GBP.

In FA I have to give the amount in my currency and the exchange rate which are 22,258.11/34,000 = 0.654650...
So I use 0.654650... as an exchange rate. Unfortunately 22,258.11/0.654650 = 34,000.02 (X')

When I try to allocate the payment I ended up with .02 left.

So, yes I could have entered more decimal in the exchange rate but anyway, things will be easier (and accurate ) if I didn't need to calculate the exchange rate as the only things which matters are the amount in my current and the one in the foreign one.

/Elax

I have, in my patched version. Basically I modified FA so the supplier amount is entered in the supplier currency (and the payment in my currency).I don't need to care about exchange rate, just put the two amounts and it works .

I can send you the patch, alternatively, you can try to convince Joe, that my way is better and include my patch in FA ;-)

/Elax

There we go

diff --git a/purchasing/supplier_payment.php b/purchasing/supplier_payment.php
index ed8f5a0..6b215e3 100644
--- a/purchasing/supplier_payment.php
+++ b/purchasing/supplier_payment.php
@@ -228,7 +228,11 @@ function handle_add_payment()
        if ($comp_currency != $bank_currency && $bank_currency != $supp_currency)
                $rate = 0;
        else
+       {
                $rate = input_num('_ex_rate');
+               $supplier_amount = input_num('_supp_amount');
+                       if($supplier_amount) $rate = input_num('amount')/$supplier_amount;
+       }

        $payment_id = add_supp_payment($_POST['supplier_id'], $_POST['DatePaid'],
                $_POST['bank_account'], input_num('amount'), input_num('discount'),
@@ -293,7 +297,9 @@ start_form();
        $bank_currency = get_bank_account_currency($_POST['bank_account']);
        if ($bank_currency != $supplier_currency)
        {
-               exchange_rate_display($bank_currency, $supplier_currency, $_POST['DatePaid'], true);
+               //exchange_rate_display($bank_currency, $supplier_currency, $_POST['DatePaid'], true);
+               // my version
+               text_row("Supplier Amount:", '_supp_amount', 0, 8, 8, null, "", $supplier_currency );
        }

        amount_row(_("Bank Charge:"), 'charge');

@apmuthu

The problem is there is no 'difference' becauce FA only allow you to enter one amount (and not the real one). Moreover the exchange rate P&L is calculating at currenty reevaluation and it's not here to correct rounding error which are there only because FA doesn't allow you to enter the real amounts.

/Elax

Thanks for the patch.

We've been thinking about this whole issue - here's where we've gotten to.

There may be an issue with your patch approach.  That is that FA holds a single rate for each day/date - what happens if there is more than one foreign exchange transaction on that date.  I know it works out the amount on the fly for each transaction but the amount may not match the rate stored for that day.  No biggie of a problem - but it may confuse the story of what's happening.  Also, it may make the Foreign Exchange gain/loss amounts incorrect.

So - this is our current plan.

We run our accounts in GBP.  We get an invoice in a foreign currency amount (EUR 200.00) - we add an exchange rate (from exchange rate historical records online) for that invoice date (say 0.75) - enter the invoice - expenses get increased by the equivalent amount in our local currency (GPB 150.00).

So far so good.

Several days later we then pay the invoice using online payment.

Now - we look at the bank statement/online banking and see the exact amount deducted in our local currency - say it comes out as a payment of GBP 161.00.

So, this is how we enter it on FA.

We look up the exchange rate for the payment date - say 0.8.
We enter that rate in the exchange rate table for the payment date.
We create a payment to that supplier for GBP 161.00.

OK so far - the payment of GBP 161.00 will match perfectly on the reconciliation screen.

Now we go to allocate the payment to the original EUR 200.00 invoice.

FA uses the payment date rate of 0.8 to figure out that is needs GBP 160.00 to fully pay the invoice.  This leaves GBP 1.00 of the payment as unallocated.

NB - it could be the other way depending on the rates - i.e. it may result in an invoice which is not fully paid.

(It's important to note that the exchange rate we enter for the payment date will hardly ever match the exact rate which was used when the bank made the payment.  Rates fluctuate during the day so an exact match is highly unlikely).

The important point to note is that at this point we have an overpayment or an underpayment.

We are going to treat this like any other overpayment or underpayment.  We may have a customer who pays us slightly too much - or one who pays slightly too little.  If they are a private customer they may not be interested in correcting the payment - and it's not worth our time to chase a small underpayment.  I've put up another post at https://frontaccounting.com/punbb/viewtopic.php?id=3982 to work out how to deal with over/under payments.

Please note - if the invoice date and the payment date are the same day then there is no foreign exchange loss or gain as the exchange rate is the same.  Any difference between the amount FA calculates for the invoice/payment and the actual payment made will be treated as an over/under payment.

The main point is this.  Foreign exchange losses/gains occur due to exchange rate differences between the invoice date and the payment date.  Differences in the actual amounts on the allocation screen should be treated as under/over payments.

Hmmmm....

Just checking here.

I thought the foreign exchange gain/loss occured when the exchange rate on the invoice date is different than the exchange rate on the payment date.

http://www.allbusiness.com/glossaries/foreign-currency-transaction-gain-or-loss/4951388-1.html

Therefore - having only one exchange rate per day keeps things clean.

What your patch addresses is the fact that the actual rate used by the bank when making the payment is hardly ever an exact match to the rate for that day.

What I'm proposing is that the difference between the amount being allocated (worked out by the daily rate and the actual amount paid in the local currency) and the amount on the invoice should be treated as an over or under payment.

Thanks for your feedback - it's great to get the detail of this sorted out.

Hi Elax,

I've just spoken to our accountant - and your patch seems to be closer to what should happen.  If there is an overpayment or an underpayment when paying a foreign exchange invoice then this should go into the foreign exchange gain/loss account.

I'm just looking into it further now.

This assumes that the invoice is paid in full each time. What happens to payments on account and say two payments to fulfil one invoice?