Book-keeping Query: Payments in two currencies
Thread poster: smol_ss

smol_ss
Local time: 07:28
German to English
+ ...
Jul 20, 2003

Hello,

Can anyone give me advise on how best to record translation sales when payments are in more than one currency? For example, some clients pay in euro, others in sterling. Should I keep two separate records or convert all payments to one currency based on the exchange rate the day it gets paid into my account?

Thanks in advance!

Sarah.


 

Erika Pavelka (X)  Identity Verified
Local time: 02:28
French to English
Use the exchange rate Jul 20, 2003

I use the exchange rate that my bank uses for deposits of foreign currencies. Given that you have to pay taxes on that income, you should be recording the amount you receive (in your home currency) of payments from abroad.

My accounting software has a multi-currency function, which is very useful. Whenever I receive a payment in a foreign currency, I enter the exchange rate of that day before recording the payment. That way, it reflects the exact amount deposited into my bank account.

HTH,

Erika


 

Sherey Gould  Identity Verified
Local time: 00:28
German to English
main vs. subordinate currencies Jul 20, 2003

I had the same situation when I moved to the USA from Germany last year. Clients still, of course, all pay in Euro. I record the original amount of the invoice and then have another column for what that Euro amount is eventually exhanged as US$ into my US bank. After all, I am claiming that (US$) amount on my (US) taxes, so the Euro amount no longer \"matters\"...
I would take the currency that your bank account is based on and make that your main currency; the other currencies would then simply be subject to the exchange rate into that main currency...
... if that helps any?


 

Johann Kristjansson  Identity Verified
Iceland
Local time: 06:28
English to Icelandic
Book-keeping Jul 20, 2003

smol_ss wrote:

Hello,

Can anyone give me advise on how best to record translation sales when payments are in more than one currency? For example, some clients pay in euro, others in sterling. Should I keep two separate records or convert all payments to one currency based on the exchange rate the day it gets paid into my account?

Thanks in advance!

Sarah.


Hello Sarah.

I convert all payments from abroad into my own currency, or rather, my bank does. When I reiceive a bank transfer, my bank automatically converts the payment into ISK and deposits it into my account. The same with checks; I go to my bank, exchange the check and deposit it into my account.
When it comes to book-keeping, it gets a little more complicated. When I issue the invoice I convert the amount into ISK based on the exchange rates that day. Then, when I receive the payment, I use the exchange rate of that day. The difference is either an exchange loss or exchange profit. But this is the only way for me to record, since I might have to submit a VAT statement every other month, and unfortunately not everyone pays within 30 days from invoice date.

Hope this helps,

JRK


 

Terry Thatcher Waltz, Ph.D.  Identity Verified
Local time: 02:28
Chinese to English
+ ...
Depends on your residence, too... Jul 20, 2003

I am not a US resident, but I take NT dollars and US dollars at times, so I use an Excel spreadsheet with a cell at the top for the exchange rate. The spreadsheet will automatically calculate the amount in either currency for me. For tax purposes, in the US there is one annual exchange rate used for reporting tax income. I don't know if it's true for other nations or not, but you might like to check. I use the approximate monthly exchange rate just to keep more or less on target with my books. I don't use anything fancy, just a new page of an Excel worksheet for each month of the year.

 

smol_ss
Local time: 07:28
German to English
+ ...
TOPIC STARTER
Thanks Everyone Jul 20, 2003

Thanks for your suggestions - I still haven't decided what will be best for me yet, but now at least I have some options to consider.

Best regards,

Sarah.


 


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