Having posted my eu invoice succesfully I now need to know how to match it off against the payment.
To get the sterling amount out of the invoice, I used hmrc's approved currency rate for March. But when making the bank transfer the bank applied a slightly different rate, and also charged a fee for an international payment.
So my question, how do I account for the difference? Do I simply write it off? Any other suggestions? I am using vt+.
Easiest way- if the two events are in the same vat period, don't key the invoice until the bank has made the payment and you know what the exchange rate is that has been used, then you can enter the invoice and payment at the same rate.
That still leaves the bank charges of course. For them, raise a dummy credit note to the suppliers account, but do NOT code it to purchases but instead to the bank charges expense account. Then match the payment, invoice and credit note.....clears the suppliers account to nil, bank figure is correct for Rec and bank charges account has been debited for the charge. Job done
If they are in different vat quarters, then do the same for the payment, but then you will have a paper currency fluctuation, so sling that to a currency variance account.
If you are doing such regularly you may consider opening a euro account. Or if amounts gethighe then get your boss to talk to his bank about locking into known current rate when he is placing the order so you know the currency exposure. Businesses can loose a lot of money if they don't do this correctly.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
They both fall in same vat quarter so will do your first suggestion and get the exact amount off the bank thrn add the credit note with bank charges. Thanks again.
Im like a sponge at the minute trying to absorb everything.
