For an overview of the issues with Foreign currency please see these articles:
Sage Financials multi-currency part 1
Sage Financials multi-currency part 2
Our recommendation
If accounting for currency fluctuations is important to your business, then this is one reliable way to handle your fx transactions:
Exchange Rate
- Set your exchange rate on the first day of each month. This means that all transactions in a given month use the same exchange rate and can really reduce the complexity.
- Navigate to ‘Configuration – CURRENCIES’ and for each currency you work in, setup the exchange rate, setting the ‘Effective From’ date to the 1st of the month.
- If you set the exchange rate late, and transactions entered before you setup the correct exchange rate will be processed with the old exchange rate
Entering Invoices
- Enter the invoices using the exchange rate of the invoice. This will pick up the correct exchange rate from the ‘Currencies’ exchange rate
Receipts & Payments
If you use the prevailing exchange rate, Sage Financials will make the appropriate posting to record the gain/loss from currency fluctuation and you can enter a quoted exchange rate if you want.
Foreign currency Customer Receipts using a GBP bank account
Without Bank Charges
- Raise Invoice
- Bank Reconciliation: [New Journal] ‘Customer Receipt’ with Payment Adjustment Type: Currency Adjustment
Match to Invoice Number
With Bank Charges
- Raise Invoice
- Bank Reconciliation: [New Journal] ‘Customer Receipt’ with Payment Adjustment Type: Bank Charges
Match to Invoice Number
Foreign currency Customer Receipts using a foreign currency bank account
Without Bank Charges
- Raise Invoice
- [Pay] Invoice ‘Customer Receipt’ with Payment Adjustment Type: blank
- Bank Reconciliation: [Match] ‘Customer Receipt’
Match to Customer Receipt Journal Item
With Bank Charges
- Raise Invoice
- [Pay] Invoice ‘Customer Receipt’ with Payment Adjustment Type: ‘Bank Charges’
- Bank Reconciliation: [Match] ‘Customer Receipt’
Match to Customer Receipt Journal Item
Foreign currency Supplier Payments using a GBP bank account
This requires additional customisation using a Holding Account to handled FX loss/gain as Sage have not configured Supplier Payments with the Payment Adjustment Type
Without Bank Charges
- Create Invoice
- [Pay] Invoice ‘Payment to Suppliers’ using ‘Bank Holding Account
This posts the GBP amount to the holding account - Bank Reconciliation: [New Journal] ‘Bank Rec Money OUT’
Use ‘Payment Number’ to post the payment
With Bank Charges
- Create Invoice
- [Pay] Invoice ‘Payment to Suppliers’
- [Pay] Invoice ‘Payment to Suppliers’ using ‘Bank Holding Account
This posts the GBP amount to the holding account - Bank Reconciliation: [New Journal] ‘Bank Rec Money OUT’
Use ‘Payment Number’ to post the payment and then use (+) to add bank charges
Foreign currency Supplier Payments using a foreign currency bank account
Without Bank Charges
- Create Invoice
- [Pay] Invoice ‘Payment to Suppliers’ Bank Account: your foreign currency bank account
- Bank Reconciliation: [Match] ‘Payment to Suppliers’
Match on Payment to Suppliers Journal Number
With Bank Charges
- Create Invoice
- [Pay] Invoice ‘Payment to Suppliers’ Bank Account: your foreign currency bank account
- Bank Reconciliation: [Match] ‘Payment to Suppliers’
- First Line: Match on Payment to Suppliers Journal Number
- Then [New Journal] ‘Bank Rec Money OUT’
Set Ledger Entry: ‘Bank Charges’
Refunds
Customer Refund
These will work the same way as Supplier Payments (see above) but replacing ‘Invoice’ with ‘Credit Note’
Supplier Refund
These will work the same way as Customer Receipts (see above) EXCEPT Payment Adjustment Type: ‘Bank Charges’ does not work.
Lets hope Sage fix this before you need it…
- Raise Credit Note
- Part [Pay] credit note
- Part [Pay] with Bank Charges using CustomerReceiptType ‘Fx Fees’
- Bank Rec: [Match] on ‘Supplier Refund’
Foreign Currency Configuration