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Level 2

Accounting for International Transaction Fee when receiving payment converted from USD

We pay some suppliers by debit card in USD and our bank statement shows the amount converted to GBP plus an International Transaction Fee. When matching the payment in Quickbooks does anyone know if there's a way of accounting correctly for this fee other than artificially inflating the conversion rate?

 

For Example:

I get a bill from a supplier for $18.00 at a rate of .80, according to QB the charge in GBP should be £14.33, my bank statement however shows a charge of £14.89 which includes a transaction fee of 40p.

I could just accept this charge as it is and change the rate to 0.8272222 but I'd prefer to account for the bank charge correctly but I can't see any way to do it.

The only possible workaround I can see at the moment is to not enter the invoice until the charge shows up on my bank account and then enter it in GBP instead of USD, this way I can enter it as a split charge.

 

Does anyone have a better solution which would allow me to enter the invoice as soon as it's received and in the correct currency?

 

Thanks

Solved
Best answer May 09, 2020

Accepted Solutions
Highlighted
Level 6

Accounting for International Transaction Fee when receiving payment converted from USD


@MikeB70 wrote:

The only way I can see to achieve this in QB would be to wait for the payment in GBP to show up on my bank statement, then enter the bill into QB in GBP instead of USD. This way I can create a split transaction. This is not ideal as I would prefer the bill to be entered in the correct currency but I don't see any other way around this.


This is the quickest workaround I've found Mike.

If you only have a few transactions I think it's easier to ignore multi-currency completely & enter FX transactions in GBP once I know total cost (incl transaction fees).

 

In your example, I wouldn't bother assigning the £0.40 to Bank Charges - I'd add to the Cost of Goods/Services & leave as one transaction for £14.89 with a memo that it was $18 plus fee.

View solution in original post

6 REPLIES 6
Highlighted
QuickBooks Team

Accounting for International Transaction Fee when receiving payment converted from USD

Welcome to the Community, MikeB70.

 

I'm here to ensure you're able to correctly account your international transaction fee in QuickBooks. This way, you can match the invoice you received from your supplier using the right currency.

 

To start, you can create a bill based on the supplier's invoice. You'll have to enter a US bill and make sure your supplier's currency is USD. Once the charge shows up on your bank account from the For Review tab, you'll have to match it with the bill you created. Then, resolve the difference amount of 40p.

 

Here's how:

  1. Go to the Banking menu.
  2. Selected the Bank Account with the payment transaction.
  3. In the For Review tab locate and select the transaction.
  4. Select Find Match.
  5. In the Match transactions window, click the Foreign currency button.
  6. Select the bill.
  7. Click the Resolve Difference to open the Add resolving transactions fields.
  8. Select Add new transaction.
  9. From the drop-down list in the Category field, select the Bank Fees expense account.
  10. Enter the Amount of the bank fee of 40p, then select Save and close.

 

Once done, add, categorise, and edit all your downloaded transactions to complete the process. Then, I'd recommend reconciling your account every month. This is to keep your account up to date and monitor the growth of your business. For the detailed steps, kindly refer to this article: Reconcile an account in QuickBooks Online. It also contains instructions on how to edit completed reconciliations.

 

Please let me know if you have other concerns.I'm just around to help.

Highlighted
Level 2

Accounting for International Transaction Fee when receiving payment converted from USD

Thank you for the reply, however we've tried your suggestion but there is no option to 'Resolve Difference' when selecting the matching transaction. Once the transaction is selected a message is displayed as follows "Matching this bill to the downloaded bank item will update the home currency amount to £14.89 and the exchange rate to 0.8272222."

I suspect that your recommended solution is where a bank charge has been deducted from the bill amount similarly to how PayPal works. In this case however the bank has converted the charge from USD to GBP then added a 40p transaction fee.

Highlighted
Moderator

Accounting for International Transaction Fee when receiving payment converted from USD

Hi there, MikeB70.

 

Along with my colleague above, I'm also here to help you. I know a way how to sort it out.

 

We can deposit the bank fee as an expense in QuickBooks. We'll need to ensure that the deposited amount has the same amount in the bank feed. In your case, we'll have to use the multi currency feature. If we haven't turned it on yet, we can do it in the Account and Settings. To guide you further in switching this feature on, you can follow the steps below.

 

  1. Go to the Gear icon.
  2. Select Account and Settings under Your Company.
  3. Hit Advanced on the left side.
  4. In the Currency section, click Edit.
  5. Make sure to select GBP as your home currency. Tick the Multicurrency box as well as the I understand I can't undo Multicurrency box.
  6. Click the Save button. Then, Done.

 

Then, let's open the Bank deposit. Afterward, please consider doing the things below. It helps you to account for the bank charges correctly. Here are the steps on how to do it:
 

  1. Within the Bank Deposit page, select the right account in the Account field. 
  2. Click the Currency drop-down arrow and choose USD United States Dollar. The transactions will be then generated here once you do it.
  3. In the Add funds to this deposit section, fill out the needed information. 
  4. Enter the bank fee amount, and account it as an expense. You can use Bank charges.
  5. Make sure to link the payment by putting a check-mark next to the customer's name.
  6. Lastly, click Save and Close.

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Also, you can check out these articles for more tips and details about recording a bank deposit in QuickBooks Online:

 

 

I'll be around together with my colleague in case you still need a hand with this. Stay safe, and be well!

Highlighted
Level 2

Accounting for International Transaction Fee when receiving payment converted from USD

Sorry but this also doesn't work. Maybe I'm not explaining it correctly but this isn't a deposit, it's a bill payment.

Original bill received in USD for $18 which at the time of payment converts to £14.49 GBP at a rate of 0,80

UK Bank statement shows payment in GBP of £14.89, this is broken down into £14.49 converted from $18. plus a bank charge of £.40p.

Ideally I need to split the payment so that £14.49 goes to the relevant bill, and the additional £0.40p goes to bank charges.

 

I thought I might be able to enter an expense transaction for the 40p and then match 2 bills to the payment but of course this isn't possible as one bill is USD and the other would be GBP.

 

The only way I can see to achieve this in QB would be to wait for the payment in GBP to show up on my bank statement, then enter the bill into QB in GBP instead of USD. This way I can create a split transaction. This is not ideal as I would prefer the bill to be entered in the correct currency but I don't see any other way around this.

Highlighted
Level 6

Accounting for International Transaction Fee when receiving payment converted from USD


@MikeB70 wrote:

The only way I can see to achieve this in QB would be to wait for the payment in GBP to show up on my bank statement, then enter the bill into QB in GBP instead of USD. This way I can create a split transaction. This is not ideal as I would prefer the bill to be entered in the correct currency but I don't see any other way around this.


This is the quickest workaround I've found Mike.

If you only have a few transactions I think it's easier to ignore multi-currency completely & enter FX transactions in GBP once I know total cost (incl transaction fees).

 

In your example, I wouldn't bother assigning the £0.40 to Bank Charges - I'd add to the Cost of Goods/Services & leave as one transaction for £14.89 with a memo that it was $18 plus fee.

View solution in original post

Highlighted
Level 2

Accounting for International Transaction Fee when receiving payment converted from USD

Thanks Paul

 

That's pretty much what I've been doing for the past 5 years, didn't even realise there was a transaction fee until moving to QB Online as bank statements don't show the charge but QB's does. I like to make sure everything's accounted for properly where possible but really it's just being a bit petty considering the charge is so small, over the course of a year it probably only comes to a few hundred £'s.

 

Anyway I have actually found a simple workaround, use a credit card with no foreign transaction fee Smiley Happy this way I also save a few hundred £'s per year and the card pays 1% cashback on all transactions with no limit - result.