Purchase in USD and sell in GBP

How-to
1

Hello,
We purchase the inventory items in USD and sell them in GBP while making the payment via third parties. Means, we transfer GBP amount to the service which makes an exchange from GBP to USD and send USD amount to our supplier in China.
Now we have a Purchase order in USD, please suggest, how to write this payment correctly in Quickfile?

2

For the invoice from the supplier, switch on multi-currency mode in your QuickFile settings and you will be able to record the purchase itself in USD.

How best to deal with the payment depends on how you need to handle the fees from “the service which makes an exchange”. If their fees are just rolled into the exchange rate you can simply log the USD purchase as paid in full, setting the GBP amount to the amount that you actually paid, and the difference between that GBP payment amount and the actual value of the USD purchase (according to the prevailing exchange rate on the date of the purchase invoice) automatically goes to the “currency charges” nominal account in QuickFile.

I used to do this sort of thing with Wise (TransferWise as it was then), where they gave me an explicitly quoted fee in GBP to make the payment, separate from any exchange rate fluctuations, so in that case I represented Wise with a GBP-denominated holding “bank account”. I would make a bank transfer in QuickFile from my current account to the holding account for the total GBP amount including their fees, then make a purchase for their fee (assigned to “bank charges”), leaving a balance on the holding account equal to the amount of GBP that they actually converted to send to the supplier. I’d then log full payment against the USD purchase, select the holding account as the source, setting the GBP amount to the holding account balance (i.e. the converted amount after deduction of the payment fee). Again any discrepancy between the exchange rate on the date of the purchase invoice and the exchange rate on the date of the payment will go onto currency charges, but this time that’s just the genuine gain or loss on exchange rather than the gain-or-loss plus the provider’s fees.

3

Hi Ian,
Thanks for your suggestion, I`ve done it according to your logic:

  1. set up two accounts of my third party: GBP and USD
  2. send the payment amount in GBP to this new GBP account as a transaction between own accounts
  3. send same amount to USD with an exchange rate fixing, same accolated between own accounts
  4. pay the bank charge in USD as Bank Charges
  5. pay the rest of amount in USD to my supplier from China
    Thanks for your help
4

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