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Foreign currency transactions

If you trade with companies based overseas, you can process foreign currency transactions in Sage One Accounts Extra. You can easily record invoices, credit notes, payments and receipts in different currencies. You can choose to use live exchange rates from the European Central Bank (ECB), which update daily so you’re always using the most up to date rate, and you can also track any losses or gains as a result of changes in the rate.

To set up foreign currency transactions

Before you start processing using different currencies, you need to enable foreign currency transactions and enter the correct currency in your contact records.

To enable foreign currency transactions

  • 1. Settings > Accounts Extra Settings > Foreign Currencies.
  • 2. Select the Enable Foreign Currency Transactions check box.
  • 3. Use Live Exchange Rates > to automatically use the most up to date exchange rates from the ECB, select this check box.

If you choose not to use live exchange rates, you must manually enter and maintain the rates for the relevant currency. You can do this from here or alternatively, you can enter the rate when posting individual transactions.

Three currencies are automatically created for you, euro, pound sterling and US dollars. You can’t delete your base currency, pound sterling, or a currency that’s in use. If you need to delete any currencies not in use, click the delete button .

  • 4. To add a new currency > on the next available line, choose the currency you require.

The rate automatically appears. If you chose to use live exchange rates, the latest rates from the ECB appear. If you chose not to use live exchange rates, manually enter the rate.

  • 5. Check or enter the following information:
Bank Charges Ledger Account* This is the nominal ledger account used for any bank charges you might incur. If required you can change this.

For example, to keep a record of how much foreign transactions cost you in bank charges, you may want to use a separate nominal ledger account to the one you use for normal bank charges. If necessary, you can create a new code from Settings > Accounts Extra Settings > Chart of Accounts.
Exchange Rate Gains and Losses Ledger Account* If the exchange rate changes between creating an invoice and receiving or making a payment, the difference posts to this nominal ledger account. This helps you keep track of how much you gain or lose through changes in the rates.
  • 6. Click Save.

You’ve successfully enabled foreign currency transactions and chosen your currencies. You’re now ready to check the currency settings in your customer and supplier records.

To check or enter the currency in your contact records

If there are transactions on a contact record, you can’t change the currency. Instead, you need to create a new contact record record for the currency you want to use.

  • 1. Contacts > click the required contact.
  • 2. Currency > choose the required currency.

If you haven’t already done so, if the contact is VAT registered, enter the VAT registration number and ensure the address shows the correct country.

  • 3. Click Save.

You’re now ready to start processing foreign currency transactions.

To process foreign currency transactions

Once you’ve set up Sage One Accounts Extra for foreign currency transactions, you’ll notice some differences when recording transactions. Your invoices, credit notes, quotes, payments and receipts now appear in the relevant contact’s currency. You can see the exchange rate used and what the value of the transaction is in your base currency, pound sterling, and can also record any currency charges incurred. When recording bank transactions, the value on the bank activity always appears in your base currency. To view details of the transaction, including the foreign amount and exchange rate used, from within the relevant bank account, simply click the payment or receipt.

Journals, other payments and other receipts are always posted in base currency and you can’t enter quick entries using foreign currency. If you need to enter an invoice or credit note, please see the section below.

If you use the VAT Cash Accounting scheme, although VAT is payable to HMRC when a payment has been made or received, the amount of VAT due is calculated from the values on the original invoice or credit note. Sage One Accounts Extra calculates this automatically for you when you run a VAT Return.

Invoices, credit notes and quotes

When entering invoices, credit notes and quotes, you should create them as normal. However, you should also consider the following:

  • The default exchange rate appears in the top section of the invoice or credit note. If you chose to use live exchange rates, this is the most up to date rate from the ECB. If you don’t use live exchange rates, this is the default exchange rate you entered in Financial Settings. In either case, you can overwrite the exchange rate if required.
  • Item lines shown on the invoice, credit note or quote appear in the relevant currency for the chosen contact.
  • If you have products with a default price, or services with default rates, the price or rate is converted based on the contact’s currency and the current exchange rate.
  • The VAT Analysis window always shows base currency. If this is a sales invoice or credit note, the PDF sent to the customer shows the net and VAT amounts for each VAT rate in base currency.
  • If you enter values for the invoice, credit note or quote, then change the contact to one with a different currency, you’re prompted to either convert the values or leave them as they are. If you convert them, the values update based on the new contact’s currency.
  • If you convert a quote, draft invoice or credit note, the original exchange rate applies. If the exchange rate has changed since you created the quote or draft, enter the correct rate in the Exchange Rate box.
  • When you enter an invoice, credit note or quote for a VAT registered EU customer, or for a customer outside the EU, the VAT rate is automatically set to zero rated and can’t you can’t change this.

For more information about how to enter invoices, credit notes and quotes, please see the following articles:

Invoice receipts and payments

There’s extra information you need to check when recording a receipt or payment from within an invoice using foreign currency.

The steps below explain how to record a receipt from a customer. If you want to record a payment to a supplier, simply replace sales with purchases and receipt with payment.

  • 1. Sales > Sales Invoices > click the required invoice > Record Payment.
  • 2. Check or enter the following information:
Amount Received* Enter the total amount paid in the foreign currency. The amount in your base currency appears under Total Receipt.
Exchange Rate* If you use live exchange rates, this is the current rate from the ECB. If required, you can overwrite this.
Paid into Bank Account* Choose the relevant bank account.
Date Received* Enter the date of the receipt.
Reference (optional) If required, enter a reference for the receipt.
Currency Charges £ Enter any charges you incurred from your bank for this receipt. Currency charges always appear in your base rate.
  • 3. Click Save.

Customer receipts and supplier payments

You can enter customer receipts and supplier payments to record a payment for multiple invoices at the same time or to record a payment on account in a foreign currency.

The steps below explain how to record a receipt from a customer. If you want to record a payment to a supplier, simply replace receipt with payment and customer with supplier.

  • 1. Banking > click the required bank account.
  • 2. New Entry > Sale / Receipt > Customer Receipt.
  • 3. Check or enter the following information:
Customer * Enter either the company name or reference, then choose the customer.
Paid into Bank Account* Check the correct bank account appears. If you need to change this, choose the correct account from the drop-down list.
Date Received* Enter the date the payment was received.
Reference (optional) If required, enter a reference for this receipt.
Amount Received* Enter the total amount the customer has paid in their currency.
Exchange Rate* If you use live exchange rates, this is the current rate from the ECB. If required, you can overwrite this.
Currency Charges £ Enter any charges you incurred from your bank for this receipt. Currency charges always appear in your base rate.

Customer and supplier refunds

You can use the customer or supplier refund option to refund credit notes or payments on account in a foreign currency.

The steps below explain how to record a customer refund. If you want to record a supplier refund, simply replace payment with receipt and customer with supplier.

  • 1. Banking > click the required bank account.
  • 2. New Entry > Purchase / Payment > Customer Refund.
  • 3. Check or enter the following information:
Customer * Enter either the company name or reference, then choose the customer.
Paid from Bank Account* Check the correct bank account appears. If you need to change this, choose the correct account from the drop-down list.
Date Refunded* Enter the date the refund was made.
Reference (optional) If required, enter a reference for this refund.
Total Refund* Enter the total amount you’ve refunded in the customer’s currency.
Exchange Rate* If you use live exchange rates, this is the current rate from the ECB. If required, you can overwrite this.
Currency Charges £ Enter any charges you incurred from your bank for this refund. Currency charges always appear in your base rate.

To check your exchange rate gains and losses

If the exchange rate changes between posting an invoice and payment or credit note and refund, the difference in the rate is posted to the Exchange rate gain/(loss) nominal ledger account. This value appears on your Profit and Loss Report as an overhead. You can view the report from:

  • Reporting > Reports > Profit and Loss Report.

To view the transactions that make up this value, click Exchange Rate gain/(loss). This shows the Nominal Activity Report and from here you can view an overview of each transaction, or to view details of a particular transaction, click the relevant line.

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