• From: Canada
  • Registered: 02/13/2015
  • Posts: 43

Topic: How to allocate the Payment to Supplier A to the Invoice of Supplier B

Hello,

We are using a 3rd party currency exchange broker to pay our supplier overseas.  Looking for a solution to allocate these transactions.

Supplier A sends us their invoice for GBP 1000 for services provided. We then exchange CAD to GBP with Supplier B and create Payment to Supplier B for CAD 1800.  Supplier B wires the payment on our behalf to Supplier A.

Has anyone come across the situations like this? How do we go about allocations?

Thank you,
Jack

andijani's Website

  • From: Singapore, India, Chennai
  • Registered: 05/02/2009
  • Posts: 6,160

Re: How to allocate the Payment to Supplier A to the Invoice of Supplier B

By Credit Supplier B Invoice - GBP 1000 booked as CAD 1800 (based on the exchange rate for the day.
Debit Purchases for CAD 1800.

By Bank Credit Cheque issued  CAD 1800
To Debit Supplier A (the 3rd party currency exchange broker) - CAD 1800.

When the money is wired as Forex to Supplier B:
By Credit Supplier A - CAD 1800 (wired as GBP 1000)
To Debit Supplier B - CAD 1800

If the Supplier B needs to have their accounts settled in GBP, then make the entries in GBP for them and how they get paid, keeping the CAD for local account heads only.

Payments made to Supplier A (appropriately GBP adjusted to CAD) can also be treated as having been made on behalf of Supplier B and allocations made in GBP itself.

Please consult your accountant on making journal entries such as this.

apmuthu's Website

  • From: Canada
  • Registered: 02/13/2015
  • Posts: 43

Re: How to allocate the Payment to Supplier A to the Invoice of Supplier B

Thank you for suggestions.  I was able to close the loop by creating a supplier credit note Supplier A (freight forwarder) for Foreign Exchange Gain/Loss Account.  (original invoice is for Freight account)
This same Foreign Exchange Gain/Loss account was used to create Supplier Invoice for Supplier B (forex broker).

andijani's Website

  • From: Singapore, India, Chennai
  • Registered: 05/02/2009
  • Posts: 6,160

Re: How to allocate the Payment to Supplier A to the Invoice of Supplier B

@andijani: Excellent way.

This can be a Standard Operating Procedure in such instances for all FA users.

Wiki-ed it.

apmuthu's Website