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MikeB70
May 13, 2020
Solved

Enter supplier refund in foreign currency

  • May 13, 2020
  • 1 reply
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So a supplier of mine based in the US overcharged me and has now issued a refund. The original bill was in USD but of course the credit to my bank account is converted to GBP, I'm trying to follow the online guide to account for the refund and I choose the correct currency, as in USD, then select the supplier and select Accounts Payable - USD, I then get an error stating "The transaction needs to be in the same currency as the A/R and A/P accounts you use. I have to choose USD because otherwise the credit can't be linked to the correct supplier as they're set up as USD.
Does anyone know the correct procedure for processing supplier refunds when the supplier is not using the home currency?

Thanks

Best answer by SixOfNine

You should have a Creditors Account in the foreign currency that you created the original purchase bill in. (also used for the supplier credit)

When matching and categorising your bank feed and have the deposit transaction from you supplier. Select Deposit then select the supplier and foreign currency Creditors (you may need to give the home currency account and the foreign currency account numbers so you can easily select each one) Account then enter the foreign currency value so that the exchange rate is adjusted and add. (Be sure to add this transaction as NO VAT if using vat in quickbooks, account for vat in the suppliers credit)

Then finish like you would normally, create a check select the supplier and add both the deposit and supplier credit.

1 reply

IamjuViel
IamjuViel
May 13, 2020

Hello, @MikeB70.

 

When recording multi-currency transactions, QuickBooks uses its home currency. You can assign a specific currency to your vendor.  

 

Here's how:

  1. Go to the Expenses menu.
  2. Choose the Suppliers tab.
  3. Click the New Supplier.
  4. Enter all the supplier details.
  5. Add the currency from the I pay this supplier with drop-down.
  6. Click the Save button.

Once completed, you can now create a bill for the US supplier. It shows both the USD and GBP amount. When you apply the payment to the bill, make sure to select the correct bank account used when you received the actual payment.

Now, that you're about to record and apply the credit you've received you can easily do it without getting the prompt. Just make sure to select the same account when creating the supplier credit.

 

You’ll find instructions on how to use the multicurrency feature to your account and assign it to a vendor in these articles:

Get back to me here if you have other questions about using the multicurrency feature in tracking your income and expense transactions in QuickBooks. I'm always here to help.

M
MikeB70Author
May 16, 2020

I'm not really sure how this addresses the issue. The advice here is how to add a supplier, assign a foreign currency to that supplier, then enter a bill. We've already done all that, the issue we have is accounting for a refund received from that supplier. We've followed the guides to process supplier refunds, selected the same accounts that were used to process the original bill & payment to the supplier but we just keep getting the error as shown in the original post.

For a small business like ours I'm not really seeing the benefit of having Multi-Currency enabled, seems to be more hassle than it's worth. I'm thinking we'd just be better off waiting until a bill payment clears our bank account so we know the cost in £and then just entering the transaction in the home currency.

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SixOfNineAnswer
February 18, 2021

You should have a Creditors Account in the foreign currency that you created the original purchase bill in. (also used for the supplier credit)

When matching and categorising your bank feed and have the deposit transaction from you supplier. Select Deposit then select the supplier and foreign currency Creditors (you may need to give the home currency account and the foreign currency account numbers so you can easily select each one) Account then enter the foreign currency value so that the exchange rate is adjusted and add. (Be sure to add this transaction as NO VAT if using vat in quickbooks, account for vat in the suppliers credit)

Then finish like you would normally, create a check select the supplier and add both the deposit and supplier credit.

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