Handling Exchange Losses & Gains in NEOSYS

Many a times, the foreign exchange rate fluctuates and hence there is a difference in the invoice currency amount issued or received as compared to the actual payment received or paid.

Hence NEOSYS handles these differences and allots the amount to a Exchange Loss or Gain A/c.

Below is an example:

A client is invoiced for 100STG / 700AED on 1/1/2007. On this date the exchange rate was 1 STG=7 AED

The client makes a payment for this invoice on 1/2/2007. However the exchange rate has changed to 1 STG=7.5 AED. Hence there is a profit of 50 AED when we receive this payment. NEOSYS automatically notices this and does the following:

1. Allocates the payment of 100STG = 750AED to the invoice in the client a/c
2. Credits the 50AED from the allocation which is overallocated to the invoice
3. Debits the Exchange Loss or Gain A/c (EXDI in this case)

The following are the ledger printouts of all the accounts which were involved in this transaction: