If you charge or pay in another currency, the euro value may change between the day you made the invoice and the day the money arrives at the bank. Therefore, sometimes the amounts do not match.
When this happens, you must reconcile and account for the transaction correctly. Below, we explain what to do in each case.
1. Sales invoices
a) You have earned money with the exchange rate (gain)
The exchange rate worked in your favor: you issued an invoice for 950€, but when you cashed it, you received 1000€. In this case:
Go to Treasury > Accounts and access the account where the collection is registered.
Click on Reconcile (top right corner) and select the transaction of €1,000.
On the right, select the invoice of 950 € and click on Reconcile.
You will see that the document is marked as paid, but a balance of €50 remains unreconciled. Select this transaction again, click on Transfer in the bottom right bar to record the difference in amount.
In the pop-up window, choose "Journal entry", and select the accounting account 768000000 Exchange gains.
Click on Transfer and reconcile.
Check that the entries have been correctly recorded in the ledger.
b) You have lost money with the exchange rate (loss)
The exchange rate has worked against you: you issued an invoice for 1050 €, but when you cashed it, you received only 1000 €. In this case:
Create a payment gateway to register the difference:
Go to Treasury > Accounts, and click + Add account.
Choose Payment gateway > Add manually.
Name the gateway, e.g. “Exchange negative differences”, to be able to recognize it more easily.
Choose the currency of the bank account where the transaction is recorded (not the currency of the invoice) and click Add account.
Log in to the gateway and click the three dots button ( ⋮ ) on the top right. Choose Edit account information.
Assign to it the accounting account 668000000 Expenses for negative exchange differences. This account may vary depending on your chart of accounts.
Now, reconcile the transaction:
Go now to Treasury > Accounts, access the account, and click Reconcile.
Check the transaction of 1.000 € (left side), and on the right side the invoice of 1.050 €. Click on Reconcile.
Go to Sales > Invoices, open the invoice for 1.050 €, and, in the right side panel, click on Add payment.
In the "Account" field, choose the gateway you have created ("Exchange losses").
In the “Amount” field, enter the outstanding amount (50 €) and click on Save.
Purchase invoices
a) You have lost money with the exchange rate (loss)
In this case, the exchange rate has worked against you: you received an invoice for 950 €, but when you paid it you disbursed 1000 €. In this case:
Go to Treasury > Accounts, and access the account where the payment is recorded.
Select the transaction of -1.000 € (left)
On the right, select the invoice of -950 € and click on Reconcile.
You will see that the document is marked as paid, but an outstanding balance of -50 € remains unreconciled. Select this transaction again, click on Transfer in the bottom right bar to record the difference amount.
In the pop-up window, choose "Journal Entry", and select the account 668000000 Expenses for negative exchange rate differences.
Click Transfer and reconcile.
Check that the entries have been correctly recorded in the ledger.
b) You have earned money with the exchange rate (gain)
The exchange rate has worked in your favor: you received an invoice for 1050 €, but when paying it you only had to pay 1000 €. In this case:
Create a payment gateway to register the difference:
Go to Treasury > Accounts, and click + Add account.
Choose Payment gateway > Add manually.
Name the gateway, e.g. “Exchange gain”, to be able to recognize it more easily.
Choose the currency of the bank account where the transaction is recorded (not the currency of the invoice) and click Add account.
Log in to the gateway and click the three dots button ( ⋮ ) on the top right. Choose Edit account information.
Assign the account 768000000 Gains on positive exchange differences to it.
Now reconcile the transaction:
Go to Treasury > Accounts and click Reconcile.
Select the transaction of -1.000 € (left), and on the right the invoice of -1.050 €. Click Reconcile.
Go to Purchases > Invoices, open the invoice for €1,050, and click on Add payment in the right side panel.
In the "Account" field, choose the gateway you have created (“Exchange gain”).
Enter the outstanding amount (50 €) and click Save.