HOME / COMMUNITY Switch to knowledge base

Multi currency account transaction

My main current account is GBP. I have set up a second account (TransferWise) which is SGD denominated. I entered a sales invoice which is for a SGD amount. This has been paid with SGD being remitted into the TransferWise SGD account. I have then set up a payment from the SGD account to pay a purchase invoice that is in SGD. At no point does the money ever get converted to GBP, however, my chart of accounts shows a currency charges which I have not incurred.
Is there a way to rectify/input this?

Calling it currency “charges” is perhaps a misnomer, but there is a cost you’ve incurred here to some extent. All the reporting in QuickFile is done in GBP and every foreign currency transaction has a GBP equivalent in the nominal accounts. For cross-currency transactions like GBP-to-SGD payments or bank transfers, you explicitly specify the amounts in both currencies so this is easy - the GBP equivalent for the SGD transaction is precisely what you say it is. But for things like when you raise a foreign currency invoice/purchase or make a payment on a foreign currency item from an account in the same currency (rather than an account in GBP) the GBP equivalent is calculated behind the scenes from the xe.com exchange rate at the time. So if you raise an SGD invoice one day the GBP amount that goes onto general sales is calculated from that day’s exchange rate. When you later pay that invoice into an SGD bank account, the GBP equivalent of the payment amount is calculated on that day’s exchange rate (the date of payment). Even if the SGD amount is the same for the invoice and the payment, the GBP equivalent amounts are different, that difference has to go somewhere to make the GBP nominal accounts balance, and that “somewhere” is the currency charges nominal.

It’s not an amount you’ve been “charged” by anyone, it’s an artifact of the fluctuating exchange rate between GBP and SGD.

Thank you Ian.

I thought that would be the case.