Multi Currency: Should I use "Is it pad auomatically" on recurring bills billed in USD and paid in EUR?

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Multi Currency: Should I use "Is it pad auomatically" on recurring bills billed in USD and paid in EUR?

I’m looking to make the most of your recurring bills feature.
Here’s the scenario:

  • There’s a recurring bill for a set USD amount
  • It’s paid automatically by my standard AIB credit card (so billed in EUR)

Do you suggest still using your “Is it paid automatically?” feature to mark it being paid by that credit card?
The complication is that the official currency exchange rate and the actual exchange rate used to bill the company are different. The bill will be recorded with an inaccurate EUR amount paid by the credit card.
Thanks for the 6 months of hard work on multi-currency. It’s working out very nicely.

  1. Eoin July 20, 2014
    Ugh, sorry about the typos in the subject line. I was of course referring to "Is it paid automatically?" on the screen to create a recurring bill.
  2. john_bullet July 20, 2014
    Eoin - just to add to Pete's answer below - you can only mark as recurring bill as being paid automatically is you select a bank account in the same currency as the recurring bill. In your case, the system won't let you record a recurring USD bill paid automatically from a EUR account, since we can't know the exchange rate on the days money actually leaves your EUR bank account.
  3. Eoin July 21, 2014
    Hi John, thanks for the follow-up. That makes sense.

3 answers

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Peter Connor ⋅ Staff July 20, 2014
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Hi Eoin,

So for a basic business when you’re thinking about rates charged (or anything actually), ultimately it’s the rate that’s charged when it hits your bank account, that’s all revenue really care about. Larger companies have other ways of manipulating exchange rates but for SME’s you can ignore that kind of stuff. So the golden rule is whatever is in  your bank account wins, the rest is makie upie, to be technical 🙂 
You’ll also have exchange fee’s, currently they have to be recorded as an invoice. Some financial orgs lump the fees into the total amount and some don’t, making it pretty impossible for us to know and therefore do it automatically for you. 
So just to recap on credit cards. You pay for the credit card bill total with a our special link ‘Pay Credit Card’ in “Add a Bill or Expense’ menu. It’s actually just a bank transfer but people understand it as a bill so we’ve lied to people in the UI, sorry!
Then every item in the credit card needs to be inputted as a bill.
Hope that helps 
Pete
 
 

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  1. Eoin July 21, 2014
    That all makes sense, thanks for the explanation Pete! We'll stick to "the Euro amount by AIB is king".

    For exchange fees, AIB don't tell us like "We've charged you 2% on top of the market rate for this final cost of €34.54 for the $50.00 bill". So we don't have an amount to record as an invoice for the exchange cost.

    Am I right in saying that you do automatic adjustments between the market exchange rate and the actual amount paid for the bill, and record those as exchange rate expenses? I think you fill in that expense category automatically in this case.
  2. Peter Connor July 21, 2014
    So this is the problem I was telling you about. Here are the different variants to multi currency accounting.

    1) The original bill amount in USD (In Bullet as the Invoice - Manually Created)
    2) The converted amount in Euro (In Bullet as the paid invoice - Manually Created)
    3) The difference between the original amount and converted amount (say USD was really strong you'd make money on the conversation, this is call Foreign Currency Gain. You have to record that separately and pay tax on it. (In Bullets Magic Automated Machine - Do nothing)
    4) The banks fee (Create as an invoice in Bullet - You need to work out the 2%)

    So we can do everything but as I mentioned in the last post sometimes the banks include the fee (as above) or sometimes they don't. So we can't pick it up in the bank rec, you'll need to work it out yourself and create an invoice.

    Some other points. You'll end up with two invoices for the one amount, this is means you won't be able to reconcile it - we're working to fix that but you can just ignore them. The auto adjustments is set at a revenue limit so it won't work for this, it's a Euro (Thanks Tax Man).

    Hope that helps, we're working to make this smoother. If you can believe this is it after 6mts work. We'll get the reconciliation issue resolved soon.

    Pete
  3. Eoin August 1, 2014
    Thanks Pete.

    Just to confirm - you don't record a "foreign exchange loss" when AIB charge us €37.83 for example, and the market rate for USD would have actually cost say €34.56 for $50 on that date?

    I was under the impression from something I read earlier that you were accounting for the difference between the market rate and the actual billing.

    I do understand you can't tell if there was a fee included in that final ban account transaction.
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Peter Connor ⋅ Staff August 1, 2014
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Hi Eoin,

Sorry for delay. I think you want to know when we record a foreign exchange gain/loss.

For starters – to know if Bullet has recorded a foreign exchange gain/loss, you should look at Reports->Account Transactions->Foreign Exchange. This report shows all the gains/losses for each transaction.

In Bullet, the way we currently calculate Foreign exchange gain/loss is the difference between rates from the issue date to the payment date. So if you create a bill for one date, then create a payment for that bill separately for another date. Bullet will record a foreign ex gain/loss. For Invoices/Bills, Bullet does not record a foreign exchange gain/loss if they are marked as paid as they are created.

To clarify the bank fees:

Any bank fees have to be recorded manually in a separate bill. Bullet does not work this out.

So in your example if AIB charge €37.83 for $50

  • If AIB statement says that they charge €1 as a bank fee, then the exchange rate that would be entered by you is 0.7366
  • If AIB statements says that the exchange rate is 0.7466, then the fee would be 50c. So a bill for 50c should be manually created by you.
  • If AIB don’t provide either then the exchange rate of 0.7566 should be entered by you and you cant record a bank fee bill. 

We’ve looked at ways to make this easier Eoin but the feeds from the banks vary so we can’t automate it. 
Hope that helps. 
 

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