We have 2 bank accounts:
To transfer from these accounts, we use Transferwise
We have simpler accounts than other because we transfer a fixed amount from the “from” bank rather than to the “To” bank, so we do not have money that comes back in this occasion, if the transfer rate has changed.
Payment works as such:
-> Initiate TW : payment from USD to GBP (eg 10 usd - corresponding to 5gbp + 3usd TW fee)
-> We make the payment from Bank_in_USD to TW_in_USD (10usd out)
-> TW_in_USD instructs TW_in_GBP to pay Bank_in_GBP - TW keep their cut in the process, transparently from us (though we know what it is)
-> Bank_in_GBP gets credited the amount due (5gbp)
so basically
(1) -> Bank_in_USD gets debited to the profit of TW_in_USD - (10usd)
(2)-> Bank_in_GBP gets credited by TW_in_GBP (5gbp)
A) First plan to reconcile the bank accounts:
Create Merchant Account TW_in_USD
Create Merchant Account TW_in_GBP
Then
Tag (1) as a Bank transfer between bank account Bank_in_USD to TW_in_USD (10usd)
Tag (2) as a Bank transfer between bank account TW_in_GBP to Bank_in_GBP (5gbp)
==> Is this correct?
This is quite straightforward, but TW_in_USD and TW_In_GBP as merchant accounts will keep accruing amounts without it balancing back to 0 - so this may be a problem.
B) Now, if we have to take care of the fees and the balancing back to 0, it becomes more complicated:
Create Merchant Account TW_Fee_USD
- in TW_Fee_USD, create a new transaction for the amount of the fee, as money in (3usd)
- tag the fee above as a transfer from TW_in_USD (Balance of TW_in_USD becomes 7usd)
(3) - in TW_in_USD, create a new transaction for the amount sent to TW_in_GBP (7usd)
(4) - in TW_in_GBP, create a new transaction for the amount received from TW_in_USD (5gbp)
- Tag the last 2 transaction (3) and (4) together as a bank transfer
==> Is the above correct?
==> Then, what do we do with the balance left in TW_Fee_USD, which is really not ours. (and keeps accruing amounts)
By the way, Transferwise also allows exporting CVS of the history of the transfers, with several columns, incluing amount out, amount in, fees, transfer rates etc… - but it does not import well in QF because all the transactions are on one line (and all as positive values). Not sure if it could be helpful to be able to import this then. (especially as QF would need to be able to handle the line-by-line multiple currencies confidently…)
Hi @guillaume.khw
I’m not familiar with Transferwise, but from my understanding from your post, it works in a similar way to PayPal and other payment providers - the money leaves one account, reaches another, with a certain amount deducted at the same time for their fee. However, in this case, it also changes currency.
Where does the GBP value end up? Is this one of your accounts, or does it belong to a supplier or client?
When you say they’re all on one line, are you seeing this in notepad for example? If so, this is common for files of this type to appear in that way. If you try opening it in a spreadsheet program (like Google Sheets, or Microsoft Excel), then it may appear in a better format.
Hi, in this case we use Transferwise to transfer money from our USD account to our GBP account. So the money from a first account of ours ends up in a second account of ours.
Transferwise has 2 methods for payment:
- either you set the value for the destination, it gives you the instant exchange rate but will use the rate a bit later. So you put a bit more than is needed in the payment FROM, and the difference after the exchange has taken place is refunded
- or you set the value at source, then it will put in the destination account what remains. no money returns then.
- a fee is levied from the money originally sent in both cases, as for paypal indeed.
TW CVS has the following titles:
“Id”,“Submit time”,“Profile”,“Status”,“Source currency”,“Amount paid by”,“Fee”,“Amount converted”,“Excess refund”,“Target currency”,“Converted and sent to”,“Exchange rate”,“Exchange Rate Date”,“Payout time”,“Name”,“Account number”,"Reference"
It would need to import in multiple accounts at once, and each line could have a different source and destination currency.
Judging by this, I would suggest a merchant account would be the best way to handle this, with the initial and final transactions being tagged as bank transfers to the original and final accounts.
However each bank account can only have one currency, so you may find it easier to do everything from your base currency perspective. I also found this topic which may be of some help, but typically a merchant account would be the way to record this.
It may best to clarify this with your bookkeeper or accountant (I’m neither) who should be able to confirm if this is correct in your situation.
I wouldn’t know where to start with importing from the CSV, but I can explain how I handle TransferWise payments in QuickFile myself. I have a “TransferWise holding account” in QuickFile in the same currency as the sending side (GBP, in my case), and my initial sending of money to TransferWise is simply a same-currency bank transfer from current account to this holding account.
I’m making payments to a supplier so my next step is to mark the foreign currency purchase invoice (EUR) as paid from the holding account, and set the GBP value to the “amount converted” from TransferWise. In your case rather than a payment to a supplier you’d need to log a money in transaction on your USD account (for the amount of USD you received) and tag it as a transfer from the holding account, again setting the GBP amount to the “amount converted”.
This leaves a residual GBP balance in the holding account made up of the fees charged by TransferWise and the difference (if any) that they refund you. For the refund, that’s just a GBP bank transfer back to your GBP current account, and for the fee I tag it to a purchase invoice for the supplier “TransferWise fees”.
If you’re making transfers both ways then you’d need a separate USD-denominated holding account for those transfers that originate from USD.
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Yes, this seems like what I had in mind.
Another idea is that we should really create
- merchant account TW in USD
- merchant account TW in GBP
- Supplier account TW - to take the fees.
Then the numbers should balance somehow.
Does it seem sensible?
That sounds like it - for any given transfer only three accounts will be involved (always the original source account and the eventual target, but only one of the merchant accounts, whichever one matches the source currency), and the “TransferWise fees” supplier.