Foreign currency Supplier Payments using a Foreign Currency bank account

Reconcile Supplier Payments with no bank charges

The scenario is:

You add a Purchase Invoice for $3,540.67 in Jan when the exchange rate is 1.20
You pay the supplier in full, $3,540.67, in Feb when the exchange rate is 1.30

Payments without Bank Charges follows exactly the same procedure and with bank charges but you do not have to add the [New Journal] to account for the charges.

Reconcile Supplier Payments WITH bank charges

The scenario is:

You add a Purchase Invoice for $3,531.00 in Jan when the exchange rate is 1.20
You pay the supplier in Feb when the exchange rate is 1.30 but the bank adds $9.60 in bank charges

Payment

From your list of Unpaid Invoices you decide to pay ACME and you make the payment using your internet banking facility. When you are ready you can mark the invoice as paid:

Identify the invoice and choose [Pay] from the pick-list menu:

This will open the Payment pane:

Date: date you will make the payment
Reference: something to help with matching to the bank statement
Exchange Rate: this will default to the prevailing exchange rate for the month and can be left as it is
Payment Journal Type: ‘Payment to Suppliers GB’
Bank Account: your Foreign Currency bank account
Payment Type can be whatever you choose (but not a Cash type)
Amount would normally be the full amount in dollars, but you can choose to part pay.
Click [Pay] to create the Journal

If you refresh the List View you will see that the invoice has been fully paid. If it has not reduced the Outstanding amount, try again or navigate to ‘Purchases- SUPPLIER PAYMENTS’ and check the journal has been posted.

The Postings

If you inspect the posting generated for the Invoice you can see the necessary postings to Bank Account, Control Account and currency adjustments have been posted.

Reconciliation

In the next day or so the payment will appear in Bank Rec:

To Reconcile the bank transaction click on [Match]

Select Journal type: ‘Supplier Payments GB’
This will list all unreconciled Supplier Payments
Make sure the ‘Filter by Date’ goes far enough back to see the Supplier Payments. If you navigate to ‘Purchases – SUPPLIER PAYMENTS’ in another tab, you can filter the List View to find the journal number you need. You can then use ‘Filter by other words’ to find the right journal item to match.

Identify the Journal Item you want to match and tick the checkbox.
This is added to the list of ‘Selected Item to Match’ leaving a Remaining Balance of $9.67

Bank Charges

To account for the $9.67 bank charges click on [New Journal] shown above
This opens the New Journal pane:

Journal Type: Bank Rec Money OUT
Date: the date of the bank transaction
Check the Bank Account( (this can default to the wrong bank)
Add a suitable Reference
Note the Currency is in USD
Exchange Rate: this will default to the prevailing exchange rate for the month and can be left as it is
Leave Name blank

A list of Payment Numbers is displayed, but just scroll down to the list of Journal Items and click on the icon to add a Journal Item line:

Choose Bank Charges for the Ledger Account
The Remaining Amount is now zero so you can [Save] to complete the reconciliation