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Foreign Currency Forward and Margin Calls

Janelle KnightJanelle Knight Member Posts: 50

Hi there, this is very long winded.

We use multi currency in our hosted accounts. However we now use a "forward" with our Foreign Currency Exchange we use to pay o/s suppliers to ensure less fluctuation for us with exchange rates.

(please see this example) Say we commit to purchase USD $10K at 50c USD = AUD $15K commitment. We have to pay an initial deposit on this commitment of around AUD $1K, therefore we essentially will have AUD $16K to use up.

If we had a big movement in the exchange rate, we may need to pay more against our commitment (margin call) and need to send them another AUD $1K, therefore we now have AUD $17K to use.

If I pay a supplier USD $2K (AUD $3K) via this forward, reducing the balance of it to now AUD $14K. How do I process all this on reckon.

At the moment my book keeper has been coding the withdrawl from the bank account to a temporary account for me to sort out.

My query is -

How do i process all this on Reckon, my suggestion is below but would love to hear more opinions

Step One:-

Create New Bank Account in USD providing all details of the forward and make it a sub account of 2003 OFX Corporate USD. Each new foreign exchange contract has a new sub-account number

For example

Number 2003.1

Account Name: OFX USD $???K DD/MM/YY (Maturity Date as per contract)

Description: Rate @ ?????? = AUD $$$$$ Enter the equivalent in AUD as per contract


Options to process transactions on the forward on Reckon:-


If a DEPOSIT OR MARGIN CALL has been paid on the forward:-

Enter a General Journal

2051 Cheque Acc            CR         $$$$     Memo:- USD $???? / AUD $???? Deposit

2003.1 OFX USD Acc      DR         ?????    Memo:- USD $???? / AUD $???? Deposit

Enter appropriate Exchange Rate (bottom of screen) before clicking Save & New

(To work out exchange rate for Reckon, calculate 1 divide the USD rate. Eg 1/.7045 = 1.4194, which is what you enter on the screen).

AFTER you’ve clicked Save & New, click on the “Reports” (not the drop down arrow next to it – unless you need to filter for differing info, eg dates etc).   This selection automatically selects any Journals enter/last modified today, use this to check the AUD equivalent for the journal is correct to ensure the bank account balances.


MAKING A SUPPLIER (BILL) PAYMENT USING THE OFX FORWARD:-

Assuming the invoice has been entered first, next go to “Pay Bills”, change the A/P Account to 3049 Accounts Payable USD, then amend the exchange rate (refer to note above to calculate) then click the bill you want to pay, ensure the Payment Account is the OFX account for the forward you want to pay from, amend payment date. Click “Pay Selected Bills”.

The payment will now show on the 2003 forward account.    Next step, do a transfer from our bank account to this forward account using the same exchange rate as the bill payment – refer to the deposit instructions above as it’s the same process.

Final Step, double click on the OFX bank account in the COA and ensure all entries are showing correct balances. 


How did I go?

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