Book Keeping Task/Consolidated currency exchange
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(New page: == Bills in Foreign Currency == Some of the bills that Pincher SAR receives are in another currency. For instance Phone.com bills are in US dollars. We don't know exactly how much these ...)
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Revision as of 04:53, 11 April 2019
Bills in Foreign Currency
Some of the bills that Pincher SAR receives are in another currency. For instance Phone.com bills are in US dollars.
We don't know exactly how much these bills will be in Canadian dollars until we actually pay them.
Fortunately QuickBooks Online allows us to set up accounts in foreign currencies. The Phone.com is set up in US dollars. This means we can enter the bills into QuickBooks in the same amounts we read on the bills.
Bill payments
When we pay a foreign currency bill from a Canadian currency account, QuickBooks will prompt us to enter the exchange rate.
For Phone.com, we typically pay the bill on our Mastercard and the statement includes the exchange rate used for that transaction.
Consolidated payments
Sometimes several bills will be paid with a single charge on the credit card (or chequing account). This sometimes causes problem with rounding errors.
Say Phone.com bills US$1.00 in May and also US$1.00 in June. To save money on processing fees, Phone.com only charges our Mastercard when the outstanding balance reaches a certain amount. So it doesn't process a payment in May, but processes US$2.00 in June.
Say that exchange comes out as CAD$2.25.
QuickBooks online will prompt for the exchange rate and represent that amount as CAD$1.12 for May and CAD$1.12 for June. A total of CAD$2.24 and out by CAD$0.01 in rounding. (Equally bad would be if it represented the amount as CAD$1.13 in both months.)
The problem is that QuickBooks Online is representing the exchange on each split of the bill payment transaction, rather than on the total.
To work around this we can explicitly represent the consolidation of the foreign currency amounts as a separate transaction from the exchange.
Instead of paying the bills from a Canadian dollar account, we pay them from a US dollar account. That way the US dollars are lumped together as one consolidated total. For instance, we can have a QuickBooks account called "ATB Mastercard US$ Consolidation", which is a credit card, and represents the US arm of our ATB Mastercard. The bills are paid from this account, and consolidate as a US$2.00 balance owing.
Then separately we represent the exchange rate. We transfer from the Canadian dollar credit card account to the US Dollar credit card account. At the specified exchange rate US$2.00 is paid off and CAD$2.25 is owing.
