Multi-currency (MC) Payments / Wire Transfer

Multi-currency Payment, MCQ, Multi-currency Wire transfer, International Payments, Cross Border Transactions

In this window, you can:

• Process a payable in one currency and use another currency for payment.

• Make a payment in the currency in which it was posted, even if it is different from the currency that you maintain in your General Ledger. An exchange rate will be applied to the payment.

• Issue a cross-currency payment against invoices for a single vendor that submitted invoices in more than one currency.

• Record the above entities as either a wire transfer or a check issued for payment.

Let’s see how these features work.

Requirement One:

You process a payable in one currency but need to use another currency for payment.

In the above example, all invoices for the vendor, American Express, were originally posted in USD. However, you want to issue the payment in CAD.

Simply select the vendor, the currency of the invoices you want to pay and the due by date range, and then the bank account used for payment. This bank account is maintained in CAD. e·silentpartner retrieves the exchange rate in effect for the payment date under GL > Setup > Exchange Rates. Accept it or change it. Once you have the Exchange Rate to be used to record the payment, click ‘Find invoices’.

Note the Amount Due converted to the paying currency. The conversion amount will be based on the exchange rate applied in the above USD – CAD.

Simply click the checkbox under Paying for each invoice you want to pay, or enter the amount to be paid if the payment is partial.

You can also apply a discount if you so desire. Irrespective of how the payment is made, that is, check or wire transfer, the Journal Entry will impact the following accounts:

* Bank Account – CAD Is credited for the payment amount
 * Bank Account – FX Is credited for the foreign exchange difference
 * Accounts Payable – USD Is debited for the amount paid
 * Discount Adjustment Credited for the discount taken (if any)

Requirement Two:

You want to pay a payable in the currency in which it was posted, which is different from the currency in which you maintain your General Ledger.

In the above example, we have a vendor who submitted his invoice in CAD. Our General Ledger is maintained in USD. We pay the vendor from our CAD bank account. However, there is an exchange rate difference. Thus we will have a gain/loss posting as well. The Journal Entry is:

• Bank Account – CAD Is credited for the payment amount
• Bank Account – FX Is credited for the foreign exchange difference
• Accounts Payable – CAD Is debited for the amount paid
• Accounts Payable – FX Is debited for the foreign exchange difference
• Discount Adjustment Credited for the discount taken (if any)
• Gain/Loss Debited for the FX difference between the FX on the invoice posting and the FX on the payment (if any)

The above is an explanation of the accounts that are impacted. Whether an account would be debited or credited would depend on whether or not the invoice was a debit or credit and whether the new exchange rate is higher or lower.

Requirement Three:

You want to issue a cross-currency payment against invoices for a single vendor that is submitted in more than one currency.

The above vendor demonstrates e·silentpartner’s cross-currency capability. Our sample vendor submitted invoices in USD and CAD. e·silentpartner will record a payment against both in CAD. In order to achieve this, you must Select the bank account, which will be used to disburse the monies. In this case, the bank account is CAD. Once you tab through the bank account field any USD and CAD that is unpaid and due by the date listed in due by will display.

The last step is to accept the current exchange rate or change it to what you want it applied to; in this case CAD invoices paid in USD. Once you have the Exchange Rate to be used to record the payment, click ‘Find invoices’.

Select the invoices to be paid, and the amounts and discounts applied for each of them.

The resulting journal entry will consist of:

• Bank Account – USD Is credited for the payment amount
• Accounts Payable – CAD Is debited for the amount paid
• Accounts Payable – FX Is debited for the foreign exchange difference
• Accounts Payable – USD Is debited for the amount paid
• Discount Adjustment Credited for the discount taken (if any)
• Gain/Loss Debited for the FX difference between the FX on the invoice posting and the FX on the payment (if any)

Requirement Four:

Lastly, you want to record the above entities as either a wire transfer or issue a check for the payment.

select either Wire Transfer or Check from the drop down list.

The remaining process follows the flow of the computer check processing described in an earlier section.