The Foreign Trader module makes it easy to record foreign currency transactions and deal with exchange rate differences. However, if you're not using Foreign Trader and you need to record foreign currency transactions, this article explains how.

NOTE: This guide applies to VAT Cash Accounting only. If you use the Standard VAT scheme, please refer this article.

Post in base currency

As the Foreign Trader module is not in use, you should record the transaction in the same currency as your base currency. This may mean you need to convert the value to the base currency.

To do this you can enter the relevant exchange rates:

1. Click Settings then click Currencies.
2. In the value column press F5 to use the currency calculator.

This converts it to your base currency when you enter the value of the transaction.

Account for underpayments

There may be instances where, due to exchange rate differences, a payment has a lower value than the original invoice. To account for this, you must still pay the invoice in full, then make further postings to show the underpayment against the exchange rate variance nominal code, 7906 by default.

In this example, the converted sales invoice base currency value is £100 but the payment is £80. This leaves £20 outstanding on the invoice.

Post the payment

1. On the navigation bar, click Bank accounts.
2. Click Receipts, then click Customer receipt.
3. Pay the outstanding invoice in full.

Account for the difference

1. On the navigation bar, click Customers.
2. Click Batch credit then enter the details as follows:
   
   

   A/C	Date	N/C	Net	T/C	VAT
   Choose the required customer	Enter the same date as the payment.	7906 - Exchange Rate Variance	20.00	T9	0.00

3. Click Save, click Close, then click Refund.
4. In the Payee drop-down, click the required customer then click OK.
5. Against the credit note you posted, click the Refund column.
6. Click Refund in full, then click Save.

Account for overpayments

There may be instances where, due to exchange rate differences, a payment has a higher value than the original invoice. To account for the difference, you must post a payment on account with a T9 tax code. You can then post an invoice to the exchange rate variance nominal code, 7906 by default, and allocate the two together.

In this example, the converted sales invoice base currency value is £100 but the payment is £120. This gives an overpayment of £20.

Post the payment and overpayment

1. On the navigation bar, click Bank accounts.
2. Click Receipts, then click Customer receipt.
3. In the Account drop-down, click the required customer then click OK.
4. Enter the required date and reference, then in Amount, enter the full amount received.
5. Against the relevant invoice, click the Receipt column.
6. Click Pay in Full, click Save, in the Tax Code drop-down click T9.
7. Click OK, then click Close.

Clear the outstanding overpayment

1. On the navigation bar, click Customers.
2. Click Batch invoice then enter the details as follows:
   
   

   A/C	Date	N/C	Details	Net	T/C	VAT
   Choose the required customer account.	Enter the same date as the payment.	7906 - Exchange Rate Variance	Enter the required details	20.00	T9	0.00

3. Click Save, then click Close.
4. On the navigation bar, click Bank accounts.
5. Click Receipts, then click Customer receipt.
6. In the Account drop-down, click the required customer then click OK.
7. Enter the payment date, then pay the outstanding invoice and payment on account in full.
8. Check the Analysis Total shows zero, click Save, then click Close.

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