I have accounts in several currencies, including USD and Euros. Lots of the time these accounts are empty: invoices are paid into those accounts, I then convert the money to GBP and transfer to our main bank account.
However, when I view the “Balance Sheet” report, it is showing these accounts with a positive balance in the “assets” section, even when the balance is zero if I actually look at the account ledger in quickfile.
It looks like this discrepancy comes because the Chart of Accounts calculates all the balances in GBP, so currency variations between when the invoice was paid and when it was exchanged to GBP show up as actual differences.
Is there a way to stop this behaviour? I want to see a positive asset balance on the balance sheet when there is money in those accounts, but not when there is not.
There’s a tool to add a special journal that doesn’t affect the foreign currency balance but adjusts out the currency fluctuation from the GBP balance.
OK, so I need to use the “Record currency loss/gain movement” entry to adjust things. How do I know what value to put in the boxes? It’s easy for the balances which should be zero: just put the reverse of whatever the current balance shown is. How do I calculate the correct GBP value for non-zero balances?
I haven’t used the tool myself (I do foreign currency payments but from a GBP holding account), but my understanding was that it calculates the amount automatically from the foreign currency balance at the relevant day’s exchange rate.
My question is: how can I identify the difference that needs entering?
Here’s a concrete example:
I have 2 USD accounts. The first account has a USD balance of zero, but shows up as having a balance of £399.90 on the balance sheet. I can reconcile this by putting in a currency correction of £399.90
The second account has a USD balance of $84.62. This shows up on the balance sheet as £95.19. As the exchange rate is more than 1 USD per GBP, this is also clearly wrong. Is there a way of automatically calculating the required currency correction? Or, do I have to manually check the exchange rate, work out what the correct GBP value is, and put in the correction for the difference?
The exchange rate is recorded and automatically adjusted when an invoice is recorded and when a payment is made. If you are just holding the funds in a non-GBP bank account, then there isn’t a way to re-evaluate this on a regular basis.
QuickFile uses the xe.com rates, which as of yesterday shows $84.62 = £65.08 ($1 = £0.7691). So the adjustment for the second account would be the difference, which is £30.11. This would bring the balance back to £65.08 (to match yesterdays rate).
So we have to enter a manually-calculated correction. That is a shame.
My business has multiple foreign currency accounts. We invoice in USD and Euro, receive payments into those accounts, and make payments from those accounts. Those invoices and payments should not be converted to GBP unless and until we transfer them to a GBP account.
For display purposes it might be worth showing the GBP value on the balance sheet, as PayPal does when you have multiple currencies in your PayPal account, but that shouldn’t affect the stored value. Yesterday, my $84.62 was equivalent to £65.08. Next month it might be a bit more, or a bit less. The balance sheet would ideally show the value of that $84.62 on the date of the balance sheet, without me having to enter a manual correction.
In our old accounting software that all “just worked” in that everything was shown in the relevant currency. It would be good if it could be made to work in quickfile too.
The base currency for QuickFile is GBP, so everything in terms of reporting is shown as GBP. The invoices and transactions themselves retain their non-GBP values.
As above, as GBP is the base currency, this is what we show at present. So your profit and loss, balance sheet, income / expenditure, segmented P&L etc., all show values in GBP.
You could re-evaluate them on a weekly or monthly basis if you’re just holding the funds in a non-GBP account, but unfortunately there isn’t an automated way of handling this at present (although I’m aware someone has accomplished this through the API).
You’re more than welcome to start a Feature Request request thread for this if you wish and we’ll happily consider it. Many of our features start off as a request on the forum
A good start would be what I had assumed already happens in my post 4 above - you have access to the xe.com exchange rate for the date of the journal so you could pre-calculate the initial value of the adjustment based on that.
I have a USD account, which on 30th June was showing a USD balance of $0 when viewed in the bank account view, and a GBP balance of £9.84 when viewed via the balance sheet.
“When committed, the balance as expressed in the foreign currency will be unaffected but the native currency value (visible in your Chart of Accounts and general ledgers) will be adjusted by the amount specified.”
Can I just check if this was journal was created as a blank journal, or if it was created through the settings of the bank account?
The currency journal needs to be created through the settings, otherwise it records it as a standard journal (and therefore would affect the balance of the account itself). Although this is mentioned in the guide, I appreciate this isn’t clear, so I will get this amended
