Customer GBP invoice was paid in USD so how to record this transaction?

rkumar1 · ‎May 21, 2020

A GBP 19k sales invoice was issued in Jan 2020 and USD equivalent was USD 25,088.74. Today the customer paid GBP 19k but the USD equivalent I received is USD 23,179.61. How to record below journal entry to receive this payment, however, since the customer account created is GBP so I get below error to post. "The currency of your deposit account and currency of the customer must be same.?

Dr. Cash USD 23,179.61

Dr. Foreign Currency Exchange Loss USD 1,909.13

Cr. Accounts Receivable USD 25,088.74

RenjolynC · ‎May 21, 2020

Hi rkumar1,

When creating the receive payment for the invoice, you can manually adjust the rate by following these steps:

Go to Sales > Customers.
Select the customer's name and click the Receive payment link of the invoice you want to pay.
Under the Customer drop-down menu, enter the new rate. You will be prompted to changed the exchange rate of the British Pound Sterling (GBP). You can select to Use for this transaction only or Use for all new transactions in British Pound Sterling (GBP).
Make sure to select Undeposited Funds from the Deposit to drop-down menu.
Click Save and close.

Once done, follow these steps to deposit the payment:

Go to + New > Bank Deposit.
Select the bank account where you want to deposit the payment.
Choose the currency from the drop-down and enter the exchange rate.
Put a check mark on the transaction and then click Save and close.

Then, run the Exchange Gain or Loss account to see the details by going to Accounting > Chart of Accounts.

I'm also adding these articles for more information about multicurrency:

Let me know if you have any additional questions or other concerns. Take care and stay safe.

View solution in original post

RenjolynC · ‎May 21, 2020

Hi rkumar1,

When creating the receive payment for the invoice, you can manually adjust the rate by following these steps:

Go to Sales > Customers.
Select the customer's name and click the Receive payment link of the invoice you want to pay.
Under the Customer drop-down menu, enter the new rate. You will be prompted to changed the exchange rate of the British Pound Sterling (GBP). You can select to Use for this transaction only or Use for all new transactions in British Pound Sterling (GBP).
Make sure to select Undeposited Funds from the Deposit to drop-down menu.
Click Save and close.

Once done, follow these steps to deposit the payment:

Go to + New > Bank Deposit.
Select the bank account where you want to deposit the payment.
Choose the currency from the drop-down and enter the exchange rate.
Put a check mark on the transaction and then click Save and close.

Then, run the Exchange Gain or Loss account to see the details by going to Accounting > Chart of Accounts.

I'm also adding these articles for more information about multicurrency:

Let me know if you have any additional questions or other concerns. Take care and stay safe.

rkumar1 · ‎May 21, 2020

Thank you very much for a very simple answer to my query.

To follow-up on this what is the reason to Receive Payment and enter the exchange rate and deposit this into put in Undeposited Funds an this from Undeposited Funds using the exchange rate entered earlier and transfer this to the bank account?

AileneA · ‎May 21, 2020

Hello, @rkumar1.

Thank you for posting back to the Community. I'd be happy to share with you some insight into Undeposited funds and Receive payment. Undeposited funds, it’s a special temporary account that QuickBooks uses to hold funds until you are ready to deposit them.

While Receiving payments in QuickBooks helps maintain accurate accounts receivable balanced. When a payment is entered into QuickBooks, the accounts and financial statements are affected.

It serves as the default Deposit to account when you receive payments, uses a payment item on an invoice, or enter a sales receipt. Once payment received, the transaction will record it at your Bank register. When you reconcile your account this will help you balance everything in your book.

I'm also adding this article for more detailed information how Undeposited funds works in QuickBooks: How to Use the Undeposited Funds Account to Receive Payments in QuickBooks Online.

Let me know if there's anything that I can assist you with QuickBooks by clicking a Reply below. I'm always glad to help in any way I can. Have a great rest of the day!

Fiat Lux - ASIA · ‎May 22, 2020

@rkumar1

As for future reference, you may utilize a 3rd party payment service to deal with multi currency transactions. You may release invoice and get paid in USD, and you customer pays it in their local currency (e.g GBP).

https:// veem.grsm.io/veems

SB8 · ‎June 11, 2020

Hi,

I tried this but when I check exchange gain or loss, the difference does not get reflected there. Not sure what am I doing wrong.

Thanks,

Smit

MarsStephanieL · ‎June 11, 2020

Hi there, @SB8.

The exchange gain will be reflected if the customer's currency is different from the currency of the bank account that is used to receive the payment. The difference of the converted amount from the invoice and the payment is the equation for the exchange gain and loss.

This is how it looks like:

	Currency
Customer	GBP
Bank	USD

If you've use a third-party tool, I suggest contacting their customer support to verify the transaction.

I added this article for future reference about the Multicurrency works in QuickBooks.

I'll be here if you need anything else in QuickBooks. Please don't hesitate to click the Reply button below. Stay safe there!

SB8 · ‎June 21, 2020

Thanks! It worked.

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Customer GBP invoice was paid in USD so how to record this transaction?