Working in Multicurrency mode

Ben
Ben Member Posts: 27 ✭✭
edited July 2020 in Accounts Hosted
I buy 90% of my stock in US dollars but sell in AU Dollars. Is Multicurrency good and easy to use ? Currenly we have to enter a foreign exchange correction everytime we pay for goods from overseas, otherwise our Profit and Loss reporting is all wrong. My bookkeeper is now suggesting I re-enter all my stock in 'approximate' AU$ to make the reports (sort of) correct. There will still be errors as the exchange rates are always changing, so a foreign exchange rate correction factor will still need to be entered everytime we pay for overseas goods. So what he is suggesting is a kind of 95% fix, but not perfect.
I just want a system that is easy, and real in accounting terms.

Comments

  • John Graetz
    John Graetz Member Posts: 1,658 ✭✭✭
    edited July 2020
    Ben.  I have an idea for you which in theory will work, but from other points of view could be totally impracticable.  I presume that you are entering the purchase as a Bill using the foreign exchange rate on the day and I presume that possibly this bill is going to reflect a (large?) number of stock items.  My "solution" would provide you with accurate information of a deferred basis.  What this would entail is when you actually pay the bill, you go back and edit it so that the total reflects the $A amount that you are paying and then this would require you to edit each line of that bill to reflect the "correct" value based on the exchange rate at time of payment.  The things that I don't know, to determine just how practicable this might be, is the number of items involved and how long after receipt of the goods it is before you actually pay the bill.  The number of items involved and the desirability, or otherwise, of having accurate accounts on a deferred basis, are things which only you can assess, in order to look at implementing such an approach.  John L G. 
  • Ben
    Ben Member Posts: 27 ✭✭
    edited April 2018
    Thanks John,
    The up side of having the goods in US$ on the system is the ease of placing Purchase orders, because I can do it very quickly and easily. This is how I have the system set up now.
    The down side is:
    Current stock value is wrong (it is in US dollars)
    Paying bills is a joke, because actual payment amount in AU$ does not match the US$ bill.
    All my COGS figues are wrong, so when I look at my P+L it is all wrong.

    If I could have 2 currencies, I think it might sort all this out. But I dont know what complications are involved when you pay a bill on the actual exchange rate on the day of payment.
    Also there is a worning saying once Multicurrency is switched on, it can not be switched off, so I want to be sure this is the answer.
  • John Graetz
    John Graetz Member Posts: 1,658 ✭✭✭
    edited July 2020
    Sorry Ben, I cannot help you on the Multi Currency front.  John L G
  • Phil
    Phil Alumni Posts: 4
    edited August 2016
    Hi Ben,

     

    If you are trading in multi-currency it is good idea to utilise this feature of Reckon Accounts – that is why it is there.

     

    If you are worried about the warning message and switching on the multi-currency feature, make a copy of your file and have a play with multi-currency before enabling it on your live file.

     

    I will run through a quick example of how it works and it might provide you with some clarity on the issue. The figures I’m using are made up and probably won’t reflect USD exchange rates, but you’ll get the idea…

     

    In a multi-currency file bills can be entered in the currency you are paying i.e. USD

     image

    The amount you enter is USD and the exchange rate you enter is at the time the bill is entered.  E.g. 1.0442

     When making payments towards that bill, the exchange rate may have changed but the amount due is still $14.37 USD. You are able to enter the exchange rate at this point e.g. 1.066

    image

    The system will then pay the bill and the difference in exchange rates goes towards a Exchange Gain/Loss account

     image

    The will be beneficial to you as you are still entering in the stock as USD but the Balance Sheet will always display in AUD as this is the Home currency.

     image


    Note 14.37 * 1.066 (exchange rate at time of payment) = 15.32

     

    I hope this has cleared up how multi-currency works within Reckon

    Phil