Handling Foreign Currency Conversion Using Design Manager Pro

Modified on: 2017-07-19 11:45:46 -0400

Design Manager does not automatically handle foreign exchanges of currency. The following is a method that can be used to record the adjustment that needs to be made to cash when dealing with foreign currency exchange when collecting money from your clients. This method requires the entire project (proposal, invoices, payments, statements, etc.) to be run in the foreign denomination. For example, if selling to a client in England, the entire project specifications, proposal, invoice, etc. need to be in Pounds. The conversion is handled when the bank statement comes in as adjustments to cash. The following procedures are only a suggestion and should be reviewed by your accountant before proceeding.

To record the exchange Design Manager recommends creating an Other Income/Expense Account for each denomination of foreign currency being used. For example, the account could be 70100 – British Pounds Exchange. The type should be Other Income/Expense. It is also OK for this account to be a either a revenue or expense account type as well.

When recording cash receipts it is recommended that a set of payment types be defined for each foreign denomination.

This will keep the foreign deposits separate from the domestic deposits in the checkbook.

When the bank statement arrives and before reconciling, each deposit will need to be adjusted to the correct amount, this difference should be the difference in the exchange rate between U.S. Dollars and the foreign denomination at the time the bank posted the transaction. These adjusts can be made using miscellaneous cash receipts to the appropriate exchange account. When the miscellaneous cash receipts are created, make sure that the date and deposit slip number are made the same as the deposit being adjusted in the checkbook.

Finally, the bank statement can be reconciled as normal and all deposits should match up. Note that the current cash balance will actually be lower if the exchanges are not in your favor; it is recommend that extra cash be kept in your account to adequately cover unfavorable exchanges and to cover the lag between recording the original receipt and receiving the bank statement from the bank. This lag can be reduced further if using online banking and adjusting the deposits sooner by checking the online register.

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