PayPal merchant accounts in foreign currencies showing wrong data on balance sheet

Accounting
1

Hi,

I have 3 PayPal accounts in foreign currencies:

  • EUR
  • USD
  • PHP

All of these accounts have a balance of 0 and they do not have active transactions.

All accounts are created in the relevant currency, ie.: PayPal USD → Account currency in QF set to USD.

Every entry has been entered into QF, and the PayPal report’s balance is matching with the data in QF. I triple checked, all the data is matching.

Entire business process: revenue from customer in foreign currency account à converted to GBP inside PayPal à Payout to GBP business bank account

Type of transactions entered into QF:

  • Sales
  • Transaction fees
  • Refunds
  • General currency conversion - From PayPal account in foreign currency to PayPal GBP

For some reason however, on my balance sheet, the accounts are showing the following balances under “Current Assets”:

EUR: 1,929.50
USD: 155.82
PHP: 1.29

What is the reason of this and how could I fix it?

Perhaps QF is applying currency rates from xe.com, whilst PayPal is showing it’s own internal rate which is likely 2-3% in their favour, hence, I am 2-3% away from the actual figures?

Thanks,

2

QuickFile maintains an underlying GBP balance for every foreign currency account - when you make a transfer between a GBP account and a foreign account the GBP amount is taken from the GBP side of the transaction, but when you make a payment in the currency of the bank account (e.g. use a USD account to pay a USD invoice) then the GBP amount is calculated using the xe.com exchange rate for the relevant day. So over time it is normal for the balance sheet balance to drift away from the true value of the foreign currency at today’s exchange rate.

QuickFile allows you to create a special kind of journal via the bank account settings that will re-value the current foreign currency balance at today’s exchange rate and adjust the GBP balance sheet balance without changing the foreign currency balance. The matching transaction (whether a loss or a gain) goes on the “currency charges” nominal.

2 Likes
3

Hello @Mark_Kajdi

Please see the last section of the guide below with reference to @ian_roberts post about the currency gain/loss journal.

https://support.quickfile.co.uk/t/invoicing-in-foreign-currencies/8901

2 Likes
6

Hi,

Original thread: PayPal merchant accounts in foreign currencies showing wrong data on balance sheet - #2 by ian_roberts

I was busy so I did not respond back in time to @ian_roberts and @QFSteve, thanks for the information provided.

I actioned the mentioned method, but the value on my balance sheet remained the same.

I’ve put the 1.29 PHP figure into QF, tried both ways, nothing happened.

I also tried putting in converted amount using xe.com (1.29 PHP = 0.018053607 GBP (rounded up to 0.2 GBP by QF), but still, the balance sheet value remained the same.

There are year-end journals on my account that prevents me from editing last year’s numbers. This has been added by my accountant. Could these journals be the issue?

Thanks.

7

Hello @Mark_Kajdi

What date are you running the balance sheet for?
What date is the Year end date?
What date are you trying to post the revaluation journal on?

You will not be able to post it back into a prior period if it is locked as you would receive the message below

image

1 Like
8

Hi @QFSteve,

You are right, I was not able to set the journal date back to 29.06.2022 as the other journal locked the entries.

Therefore, I’ve set the journal / balance sheet settings to the following, now it evens out the values accounts on my balance sheet:

What date are you running the balance sheet for? → 29.06.2023
What date is the Year end date? → 29.06.2023
What date are you trying to post the revaluation journal on? → 29.06.2023

Thanks for your help.
Regards,
Mark