Hi,
I’m looking at my profit/loss sheet in anticipation of filing accounts and have noticed something slightly odd for foreign currency purchases and wanted to make sure this is correct.
We purchase form Sweden making our purchases in kronor SEK which is an exchange rate of roughly 10-1 with GBP. I enter their invoices in SEK. However they seem to be listed alongside our GBP purchases without an exchange rate applied. So my 25000SEK (~£2500) purchase appears in my general purchases as 25000. I guess this makes sense as the exchange rate is not defined at the point of invoicing, only payment.
This is then offset with a currency loss/gain entry under currency charge 7902 (so in the case of the example above 22500.
I’m not an accountant so I’m trusting that quickfile has this implemented correctly - but I just want to check that I haven’t used the foreign currency purchase incorrectly some how.
Any help would be greatly appreciated.
Hi @rozhawk
Exchange rates are captured for two points - invoice date and payment date. The related GBP value will then be recorded.If there’s a difference between the two exchange rates, then the loss/gain will be recorded against this.
For example, I have an invoice of €100.00 dated 4th November:
This has been recorded with an exchange rate of £1 = €1.1231, therefore is recorded at
This is then marked as paid today at the current rate of £1 = €1.1655, and a currency gain is recorded too in account 2100 (Currency Charges):
So instead of paying £89.04, we’ve now paid £85.80 because of the currency changes.
This is also shown at the top of the invoice:
Hope that helps?
That does make more sense! My exchange rate appears to be set to 1.00 though. Is the exchange rate automatically set or do you need to manually enter it?
Thanks for the quick help!
We pull in a daily exchange rate from xe.com, so it should suggest one automatically, but you can override it.
You should be able to edit it and enter the correct exchange rate, under the issue and due date boxes
