One of our UK suppliers has 'invoiced' us in £sterling for some Euros he had sitting in his Euro bank account - absolutely nothing to do with his supplies - it's just that we buy goods from other European suppliers and have 'bought' them because supplier ends up getting a better exchange rate than he would if transferring them to his UK bank account and we get a better rate than we would if purchasing Euros elsewhere. The Euro cheque was deposited in our Euro account. We have paid the supplier's invoice for the Euro's at the agreed exchange rate from our £sterling account. So.... my question is:
How do I allocate this purchase invoice? Do I just simply set up a new 6000 code called 'Euro purchases' and mark it as paid from the £sterling account.
Thanks for replying... still unsure though....how do I account on Sage for the appearance of funds in our Euro account/payment to our supplier of his invoice for the purchase of his Euros (ie not goods). Should it have been done differently? ie he shouldn't have 'invoiced'? We have paid him for the Euros from our £sterling account?
thanks
Karina
It just appears from what you have said that you have paid money out of your current account and put it in your euro account, a simple transfer, if you forget the fact that the denomination has changed it would be a simple transfer. The charge for the euros should be absorbed i.e we bought 13000 euros at 1.19 so it cost £10924.36, obviously there was a charge for this in a round about way, but the company that sold us the euros didn't charge us they just bought 13000 euros at 1.2 which cost them £10833.33 so they made their money that way. If you are saying that you have been invoiced for buying the euros i.e charged a service then yes I would likely put it as an overhead.
-- Edited by Rhianrach on Thursday 9th of February 2012 06:29:06 PM
We just use a euro account to store it in in sage, when we buy euros we transfer the amounts in sterling from current to euro, making note of the exchange rate we bought them at.
Thanks for replying... still unsure though....how do I account on Sage for the appearance of funds in our Euro account/payment to our supplier of his invoice for the purchase of his Euros (ie not goods). Should it have been done differently? ie he shouldn't have 'invoiced'? We have paid him for the Euros from our £sterling account?
Ok... so we deposited cheque from our supplier for Euro133000 into our Euro account. He invoiced us for £110,281.92 (based on 1.2060 xrate) for those Euros. We have paid him £110,281.92.
We now have 133,000 euros in our Euro a/c and £110,281.92 less in our £ account.
I will create a code (say 5042 called 'Euro purchases') and allocate his purchase invoice to that code and mark it as paid from our £sterling account.
It is that easy-peasy and straight forward isn't it? Basically we've bought an asset haven't we? Just couldn't get my head round the concept and I've been making a mountain out of a molehill as usual :))
Ok... so we deposited cheque from our supplier for Euro133000 into our Euro account. He invoiced us for £110,281.92 (based on 1.2060 xrate) for those Euros. We have paid him £110,281.92.
We now have 133,000 euros in our Euro a/c and £110,281.92 less in our £ account.
I will create a code (say 5042 called 'Euro purchases') and allocate his purchase invoice to that code and mark it as paid from our £sterling account.
It is that easy-peasy and straight forward isn't it? Basically we've bought an asset haven't we? Just couldn't get my head round the concept and I've been making a mountain out of a molehill as usual :))
No I wouldn't do that I would just do a straight transfer of £110281.92 from current a/c to euro a/c, make a note in the transfer of exchange rate so you know what it should be in euros.
I thought when you said invoice that they had charged you a nominal amount for the process, which isn't the case so just keep the invoice in a seperate file and make a reference to it in your transfer, would be my way of doing it.
If I do a transfer though, I'll effectively have 266,000 Euros in a bank account with no record of £110,281 being paid out to the supplier. Sorry... I've not been explaining myself very well.... my head is hurting lots... maybe this is one for our accountants. Ask them how they'd like it to be posted? It is an unusual scenario....
You have bought 133000 euros, they are now in your euro account.
You will have a current account setup in whatever accounts package you use, you should also have a Euro account setup.
So £110,281 has left your current account and 133000 euros have gone in your euro account so what you have done is transfer money from one account to another, all that has changed is the currency from sterling to euro dollars. Your supplier has made some money by buying the euros at a slightly better rate.
You dont need to show the £110,281 going to a supplier you just have to show it moving accounts, as that is all you have done, changed sterling to dollars and put it in a different account.
Personally I show it in the euro account as sterling with a note of the exchange rate so that I know exactly what the euro amount should be for that particular transaction.
I sort of get the feeling we are at crossed purposes here. Sorry.
I really haven't explained myself properly - sorry. We have 'bought' the euros, ie the currency - no goods have been exchanged, from someone who happens also to be a UK supplier of ours. Essentially we have bought some cash, he gave this to us as a Euro cheque for 133,000 Euros which has been deposited into our Euro account. He has invoiced us for the Euros in £sterling and we have paid him for them out of our £ account. Both accounts are on sage and run in £sterling.
The reason this has been done is that our (UK) supplier gets an annual EU farming payment. He is getting a better exchange rate from us than he would have done from the bank had he transferred the money into £ through his bank. He only receives these EU payments in Euros - he has no other reason to need a Euro account. We are getting a better rate of exchange than we would had we transferred £money from our £account into our Euro account to pay some of our European suppliers. We only buy from Europe - we don't sell in Europe.
I feel guilty I'm putting you to so much trouble but thanks for trying to fathom out what I'm saying. If this explanation hasn't helped then let's leave it!!!
Yeah my previous answers still apply from your explaination.
You have effectively transferred money from one account to another, it just happens to of switched currency on the way.
In my mind there is no point accounting for the middle man as they both effectively contra each other out.
It may just be my explanation, as has been proved many times before I tend not to explain things very well, but in a nutshell I would just do a straight transfer in sage, obviously keep the paperwork and show in the details of the transfer the exchange rate you were getting.
I have been reading this thread with interest. Just for clarification, what nominal code did you use in the P & L? Maybe in the 79xx range to do with currency charges? I suppose this would then represent the exchange rate variance?
I said, wouldn't it be a simple matter of using a bank transfer from current account to euro account, ignoring the invoice as basically you have just swapped sterling from one account to euros in another.....didn't think it over complicated...then i re-read your post Steve and i seem to have quoted you more or less lol. I wondered where i got that sudden great idea from, it was like i had an epiphany, i thought it was all coming together but they were your words.
Next time i have a great idea i'd preciate you letting me post first lol.
I posted both the payment and receipt to 3200 as it was a straight swap really of money coming in and money going out - I couldn't do a transfer between our two accounts as such as that would have left us with the deposited Euros plus the transferred £sterling and wouldn't have shown any cash going out of the business.
We have four bank accounts set up on Sage and all are reconciled. We have two sterling accounts, one Euro and one Moneycorp (which we use for Euro, Rand and $). I run them all through Sage in £sterling using HMRC exchange rates - regardless of what exchange rate I know has been used for any purchase as this can vary considerably and not easy to work out with Moneycorp when you're buying forward etc etc. Any variance in month end reconciliations I post to 7906 foreign exchange variance.
If you do it differently I'd be interested to know as I've just picked all this up as I've gone along!
I said, wouldn't it be a simple matter of using a bank transfer from current account to euro account, ignoring the invoice as basically you have just swapped sterling from one account to euros in another.....didn't think it over complicated...then i re-read your post Steve and i seem to have quoted you more or less lol. I wondered where i got that sudden great idea from, it was like i had an epiphany, i thought it was all coming together but they were your words.
Next time i have a great idea i'd preciate you letting me post first lol.
Yeah it is really as simple as that, posting it to a nominal sort of adds work, at least you have assured me that I'm not going crazy.
Must admit the posting to P&L seems extra work to me too, as we just show these as transfers between Sterling and Euro Accounts and then use Currency exchange gain/loss codes to correct any variances.
This is on very similar transactions as we use Travelex when converting Euros to Sterling or Vice Versa as the rates they give us are so much better that the bank directly.
So even though there is a third party in the middle (Travelex) we just make notes on the journal for the transfer showing the deal number and just show as a transfer from one account to the other (and our accountants are happy with this).
Must admit the posting to P&L seems extra work to me too, as we just show these as transfers between Sterling and Euro Accounts and then use Currency exchange gain/loss codes to correct any variances.
This is on very similar transactions as we use Travelex when converting Euros to Sterling or Vice Versa as the rates they give us are so much better that the bank directly.
So even though there is a third party in the middle (Travelex) we just make notes on the journal for the transfer showing the deal number and just show as a transfer from one account to the other (and our accountants are happy with this).
Ridesy
Hehe yeah we use HIFX, much better rates than the banks and no hidden charges, my boss thinks banks are legalised muggers.
Why what did you say 
If I do a transfer though, I'll effectively have 266,000 Euros in a bank account with no record of £110,281 being paid out to the supplier. Sorry... I've not been explaining myself very well.... my head is hurting lots... maybe this is one for our accountants. Ask them how they'd like it to be posted? It is an unusual scenario....
