Topic: How to manage local expenses related to international purchase invoice

We are facing this hurdle, as mentioned in the topic title.
On Purchase, where we mentioned the item, further expenses (i.e. freight charges...) can be added, but this is where the problem starts.

First,
We, most of the time pay taxes, freight charges in the local currency, but in Purchase Invoice, we can only add those expenses in that company's currency which is different from the local currency.

Second,
Adding those expenses will be added in the company general ledger account and it affects the report because those expenses are paid by us not by that company from which we are purchasing.

Let me know how to handle this thing.

Re: How to manage local expenses related to international purchase invoice

Convert to local currency and then enter the expense and the supplier account will have differences in exchange rate gain/loss that gets adjusted with exchange rate on prevailing date entered.

Re: How to manage local expenses related to international purchase invoice

Do you mean to convert the expenses from local currency (i.e. PKR) into the Company's Currency (i.e. USDollar) and add them GL Items at Purchase Invoice, if that's what you mean then the expenses will be added in company ledger which we don't want because these expenses are paid by us.

Re: How to manage local expenses related to international purchase invoice

Your supplier company's account is in USD
Your home currency is PKR
Purchase Invoice is in USD and needs to be settled in USD at a specific exchange rate.
Your local expenses are in PKR
Make the entry to be:

By Supplier Company Invoice Cr. USD 100
By Local Expenses on Supplier Invoice Cr. PKR 25
To Purchases Dr. (USD 100 converted to PKR + PKR 25)

This should make sure the inventory Qty is properly costed including the local expenses.

Anyone know of a better idea?

Re: How to manage local expenses related to international purchase invoice

Thanks apmuthu,
I'm sorry to say but I still don't understand your response. I would like to tell you that before posting this question here, I tried to find the solution on this forum and tried to google it and found that there is no straight method in front-accounting.

This is what I think;
At Purchase Invoice, the GL Items are entirely related to supplier company, i.e if supplier company is paying all VAT expenses, and if I add these expenses at GL Items on Purchase Invoice, it will be like "Item 1 Total + Item 2 Total + VAT + Freight = Total Purchase Invoice", it will be straight and proper way BUT if WE are paying further expenses (i.e. Freight, VAT...) then we can't add them in GL Items of Purchase Invoice.

I think of two methods;

  • We will have to do a manual calculation on Excel and add them quantity-wise on the purchase invoice, but this is the worst method because we won't know the expense type and expense amount.

  • We will create Account for all expenses (i.e. Freight Expenses, Agent Expense...) and then once we create a purchase invoice, we will have the invoice reference number and add it in the memo of journal entries of all expenses so that we can know the expense type and amount.

Re: How to manage local expenses related to international purchase invoice

FA 2.5 may have some straight forward ways to do this.
@joe: any workarounds for now?

Re: How to manage local expenses related to international purchase invoice

I have no straight solutions. We have been discussing the so called landed costs over the years. You can search the forums for 'landed cost' or something like that.

I found a QuickBook discussion about the subject.

https://quickbooks.intuit.com/learn-sup … /00/261126

Maybe this info can be of interest.

Joe

Re: How to manage local expenses related to international purchase invoice

Thanks @joe.

How do we propose to handle it in FA 2.5? Additional fields or addition line items to Purchase Invoice as re-imbursables or onsite payables to third parties?

The said link in the post above is PDFed here.

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9 (edited by mr.murtaza.abbasi 12/09/2019 09:11:49 am)

Re: How to manage local expenses related to international purchase invoice

Thanks to both of you,
I've one suggestion for you.

At Purchase Invoice, where we can add GL Items. What if their would-be checkbox that can tell either expenses are paid by supplier company or by buying company, if these expenses are paid by the supplier company then the functionality would be same as in current version, but if expenses are paid by buying company then it needs some functionality as follow.

All expenses are added using GL Items section at Purchase Invoice, and once the Purchase Invoice is proceeded by user, the total payment of items will be in Supplier company account, and GL Items amount will be with relative GL Account, and if you want to check the purchase invoice we could see those expenses as well.

I'm kind of amateur to Back-end programming but here is my idea.
You will have to relate GL Account Transaction row with purchase invoice using the foreign key, so every time we try to open the same purchase invoice, the query will also fetch the GL Item transactions related to the purchase invoice.

I might start playing with FrontAccounting once I learn the back-end, database structure of FrontAccounting. If you can guide me where I can get Documentation for making changes in core functionality or creating Addons or themes, that would be really helpful.

Re: How to manage local expenses related to international purchase invoice

The Wiki and the Forum are the best places to search for "Documentation".

11 (edited by mr.murtaza.abbasi 12/10/2019 09:28:05 am)

Re: How to manage local expenses related to international purchase invoice

@apmuthu, @joe
What about the suggestion I have given above?

My Suggestion:
At Purchase Invoice, where we can add GL Items. What if their would-be checkbox that can tell either expenses are paid by supplier company or by buying company, if these expenses are paid by the supplier company then the functionality would be same as in current version, but if expenses are paid by buying company then it needs some functionality as follow.

All expenses are added using GL Items section at Purchase Invoice, and once the Purchase Invoice is proceeded by user, the total payment of items will be in Supplier company account, and GL Items amount will be with relative GL Account, and if we want to check the purchase invoice for cost calculation, we could see those expenses with purchase invoice as well.

Re: How to manage local expenses related to international purchase invoice

@joe & @itronics will surely find a way forward in FA 2.5 which will probably get released in a few months/years unless someone is willing to sponsor development in that direction to hasten the pace of development. This will certainly take into account your suggestions as well.

Other topics that discuss this issue are:
Cost Of Service in FA 2.4.6 only after Sales Invoice posting
Handling, Shipping & Clearance
Landed Costing of Inventory Items