We have a supplier in the USA who took a prepayment so I have tagged this to the suppliers account as a prepayment. They bill in USD so Barclays converted this to GBP at the exchange rate plus a transaction fee (I tagged this as a bank charge on the invoice I mention below). They have now sent us an invoice in USD which they have deducted off our account balance. I have added a purchase invoice to this supplier and converted this to GBP myself with the exchange rate Barclays used. I also added the back charge onto this invoice.
Is this the correct way for going about this? I think it will be around 10-50p out so it could cause some problems.
If Barclay’s are taking it from a GBP account, and assuming they take the fee as a separate charge (so you always know what it is), I think your best way would be as follows:
Create a USD invoice
Mark as paid from within the invoice, and enter the amount Barclay’s have taken for that invoice
Create another payment out equivalent to the fee, tagged to bank charges
In terms of the prepayment, you can add this via the prepayment option on the supplier account, again specifying the amount Barclay’s have taken etc., and repeating it for the bank fee.
Hope that makes sense!
P.s. I’m not an accountant, so it may be worth just double checking
The supplier take the payment but its from our Barclays account. Barclays include the transaction fee within the same transaction (what a pain - thats Barclays for you!). They do mention within the transaction how much it is though.
Will it work if I create a USD invoice as it would be tagged as a prepayment in GBP?
Ive got the prepayment added already to the supplier account.
Make sure to enter the correct corresponding GBP and USD amounts. If the prepayment is already on the bank deleted the original once this has been created.
Now if you raise a USD purchase invoice you can log this prepayment to the invoice in full/part.
What’s important from an accounting perspective is what you paid in GBP and the amount you want to lodge in USD to the supplier account. If you want to break everything down with the actual rate used and itemised fees you’d need to setup a USD bank account, transfer the payment into there, pay the USD invoice from that same account and lodge the fee. It’s overkill if you’re just talking about one transaction.
