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andrew118
April 23, 2022
Question

Wire Transfers between Bank Accounts

  • April 23, 2022
  • 1 reply
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I have a client that has 2 chequing accounts with the same bank, one is Canadian Funds and the other is US funds.  Instead of transferring funds between the two accounts they have decided to use a foreign exchange to get a better exchange rate.

 

So they send a wiretransfer to the foreign exchange from their canadian bank account.  The foreign exchange then deposits the US funds into their US bank account (taking their fee of course).

 

I'm struggling with how to record these transactions.  Its like a transfer between accounts however there is a middle man in the process.

 

The first transaction, for simplicity is like this.

1) Send $20,000CDN from canadian account to purchase $17,000 US.  So payment of $20,000 comes from Cash but they haven't really purchased anything.  They have a credit to their cash, an exchange loss/gain and then - really nothing.  I suppose the foreign exchange is technically an A/R at that point as they owe them the funds.

2) Deposit of $20,000US comes into the US bank account.  So the US chequing cash gets debited, but what is the credit?  I was thinking perhaps it is the A/R going down but do this transaction #1 would have to be an invoice or a customer credit memo?

 

Any ideas?

 

 

1 reply

LeithG
LeithG
April 25, 2022

Hi Andrew

 

I also work with a foreign exchange firm for this reason; here is how I go about booking my trades:

1. Record a transfer from my USD account to an interim trader account, representing the money in the hands of the foreign exchange firm.  The account for the FX firm is in my local currency (CAD), and the rate entered for the exchange is the one quoted to me by my FX firm.

2. Record a transfer from my FX holding account to 'Undeposited Cash', all in CAD (this will make sense in a second).

3. From New-> create a Bank Deposit.  This will allow me to choose the transaction listed in the Undeposited Funds account, below that, I can add additional lines for things like Wire fees, transaction fees from the FX firm, etc.  Note, any expenses as such need to be entered as negative values.

 

Using the method as described above, when the various bank transfers occur within the Banking module of quickbooks everything matches, and I can record the wire/fx fees while the money movement all ties.

 

Hope this helps!

Leith

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