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intgl
October 5, 2019
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Exchange Rate to use when Paying Foreign Supplier from Foreign Currency Account

  • October 5, 2019
  • 1 reply
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Good day all,

 

When dealing with Foreign Supplier Bills,  we enter them using the prevailing exchange rates on day of import. Each Foreign Supplier has their own account setup in the Currency of the Supplier (GBP). We then pay Foreign Suppliers about 30 - 60 days later using either of the two methods shown below. (I have shown currencies below as USD and GBP, as the currencies we use in our region are not very common.)

 

1) Paying Foreign Supplier from Local Bank Account held in Home Currency (USD).

 

- The foreign supplier is paid from our Local Bank Account held in Home Currency (USD). The bank converts this to Foreign Currency (GBP).

- USD amount actually deducted by the bank divided by the GBP Invoice amount gives us the actual Exchange Rate used, and this is entered in the 'Exchange Rate' field in the 'Pay Bills' Window leading to either Exchange Gains / Losses.

 

I should believe the process we are using above is straightforward and correct when paying using our Home Currency.

 

What I have a problem with is how to account for Exchange Rates when paying directly through our Foreign Currency Account (GBP) as shown below:

 

1) Paying Foreign Supplier from Foreign Currency Bank Account held in Foreign Currency (GBP).

 

- When Exchange rates are favorable, we convert and transfer a bulk amount of Home Currency (USD) into Foreign Currency (GBP).

- This is accounted for by using the 'Banking > Transfer Funds', to transfer from our USD account to the Foreign Currency GBP account (held at the same bank) using the Exchange Rate provided by the bank for conversion.

- We pay the due amount to each Foreign Supplier when required using these already converted funds.

 

Now, since there is no conversion at time of payment to Supplier (as GBP to GBP in this case), please advise what I am supposed to enter in the 'Exchange Rate' field in the 'Pay Bills' window? How are Foreign Exchange Gains or Losses accounted for in this case?

 

I hope the above query is clear and your opinions and suggestions are most welcome.

Thanks.

Best answer by Ryan_M

Hello @EdwardR ,

 

Please advise if there is a manual work around for the process I mentioned, if indeed it is the appropriate method to follow.

 

Also, to clarify, my query is not about downloading or generating Exchange rates within QB.

 

Am using QuickBooks Desktop Premier sourced from South Africa (am guessing this is UK version).

 

Thanks. 


Hi @intgl,

 

Thank you for your prompt reply. I'm here to take care of your query about multi currency transactions.

 

In QuickBooks Desktop, You'll have to manually enter the exchange rates of any given transaction. As @EdwardR mentioned above, the feature you described isn't available at the moment.

 

I understand how this feature would be handy to you and a lot of other users out there. With that said, we've taken note of this suggestion.

 

Do you have other questions in mind? Post them below, and I'll get back to you.

1 reply

IamjuViel
IamjuViel
October 5, 2019

Hello, @intgl.

 

You're on the right track in writing a supplier bill. The Currency Revaluation is translating your foreign currency into your company's reporting currency. I'm here to share a few insights and help you from there.

 

To start with, the concept of currency revaluation is updating all the changes in the exchange rate for your home and foreign currencies.

 

On the other hand, once a transaction has been paid with the home currency account, you're unable to convert them into a foreign one. Because the exchange rate will always show on your transactions and your home currency is the default display of your report's data.

 

To fix this, you can consider using your foreign bank account when paying your transactions recorded with the home currency. This way. it'll be posted into your specific foreign account.

 

In case you need some more insights, you can read this article to learn more about multicurrency: Set Up and Use Multicurrency.

 

Keep me posted if you have other questions. I'm always here to help.

I
intglAuthor
October 6, 2019

Hello @IamjuViel ,

 

Thank you for your response.

Regrettably though, I feel my query has not exactly been addressed, hence would like to clarify as below:

 

I have indeed setup Multi Currency. 

Home Currency is USD.

Foreign Currency is GBP.

 

Foreign Suppliers are set up as GBP suppliers (as they Invoice in GBP).

In addition to my main Bank Account in USD, I have also setup a GBP account in Quickbooks.

 

When paying from my USD account, I have no problems with recording the Exchange Rates and subsequent Exchange Gains / Losses.

 

What I have a problem with is when I pay GBP suppliers using my Foreign Currency GBP account.

There is no currency conversion between USD and GBP here at time of payment. However, there is an Exchange Rate field at the bottom left corner of the 'Pay Bills' window that needs to be filled in.

What am I required to enter here please?

 

Thanks.

IamjuViel
IamjuViel
October 6, 2019

I thank you for taking your time in getting back to us, @intgl.

 

If you have not enter the exchange rate for the currency you're using, you'll have to manually enter it in the Pay Bills window.

Keep me posted if you have other questions. I'm always here to help.

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