Is there a way to set the exchange rate to use for a credit note created from a foreign currency invoice?
I think this could be important. Consider the following situation:
- Raise an invoice for 100 EUR on 01/05/2019. This gets created with an exchange rate from GBP of 1.1626, and a debit shows up in the Debtors Control Account for £86.01.
- Now later, say on 09/05/2019, for whatever reason, a credit note needs to be issued to this client for the full amount of the invoice. Creating a credit note from the invoice on this date, the exchange rate isn’t shown, but it uses the exchange rate of 1.1620, and a credit of £86.06 shows up in the Debtors Control Account.
This means that while the invoice in EUR is credited in full, the Debtors Control Account is now 5p in credit. While small in this case, it is not right because the only way to clear this is to journal it to somewhere (i.e. Currency Charges), which clearly isn’t appropriate as (in this case) the invoice was never paid in the first place so there can’t be a gain on it.
I could of course create the credit note on the same day as the invoice, but that’s not what happened so could confuse the records. If I actually send a credit note to the client it should be dated on the day that it was sent.
If it was possible to just alter the exchange rate on the credit note (like you can on an invoice) to match that used for the original invoice then then this wouldn’t be a problem, but I can’t see a way to do this. Am I missing something? In fact, the credit note should probably default to the same exchange rate as the invoice that it was created from.
Note that in the example above, the credit note was for the full amount of the invoice, but the same situation would occur if it was only for part of the invoice.
The situation is even more complex in the case where an invoice was paid, and then refunded at a later date. In this case there would likely be a genuine gain or loss between the two transactions, which should ideally be handled by the credit note automatically rather than needing a manual adjustment from the Debtors Control Account (which would easily be forgotten). Again, this would be simple if the credit note used the same exchange rate as the day of the invoice.