Handling receipts in one currency to pay off invoices in another currency

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1 Handling receipts in one currency to pay off invoices in another currency

1.1 Invoice is in one currency but it is settled using a receipts in another currency

1.1.1 The problem

A client is issued an invoice of 1000 USD i.e. 3680 AED, but later on the client transfers amount/provides a cheque of 3650 AED due to a difference in the exchange rate and moreover the client wouldnt mention the USD amount as they would be having a local bank account and used their own exchange rate rather.

In this case the agency / NEOSYS user has to handle the difference in this amount.


1.1.2 The solution

There are two amount columns on the receipts journal. 1st is the amount into the bank which isnt in doubt and in this case 3650 AED. The 2nd is the amount credited to the client which has to match the invoices being paid off - and it is up to the user to decide how much USD currency (in this case) he is going to allow the client for the AED currency that he received. Receiving the wrong currency to pay off invoices is a very very common requirement in business.

If you had to pass a receipt now, you will have to pass the following journal which would give you an error message saying that there is a difference between the bank base amount and the client base amount.


You need to add an additional line (to credit the difference to the Bank Charges A/c) in order to balance this journal entry, as below: Receiptissued.jpg

1.2 Invoice is in one currency but it is settled using receipts which are in multiple currencies

To settle invoices in multiple currencies, leave the second amount blank and go to allocate. The fact that the allocation screen will show you ALL outstanding currency invoices but as soon as you choose one currency line it will restrict you to only allocating items of the same currency - since you cannot allocate more than one currency in one go.





Thereafter the currency amount comes automatically, but you still need some idea of how much XYZ currency you are going to allow the clients for his AED payment.

However you will still find a difference and need to post the difference to a Bank Service Charges A/c

1.3 Invoices are in multiple currencies but it is settled using a receipt which is in one currency

If you receive a payment in one currency that is to pay off invoices in MIXED other currencies then you have to create one journal line per currency that you are going to pay off as follows.