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Accounting for bank processing fees – A special case

IsopoIsopo Member Posts: 17

Hey there!

I have a special situation with bank processing fees and I would like to get some thoughts about the best way to account for it. Let me explain step by step:

  1. I send an invoice for USD1000
  2. The client sends a wire payment for USD1000 but I get USD950
  3. I could just mark the invoice as fully paid and then add an expense for USD10 as 'Bank Service Charges' or something similar.
  4. The thing is those USD950 are automatically converted by the bank to my local currency (ARS), which means the money doesn't come into my USD account, it goes directly to my ARS account. That's how it works here in Argentina today.
  5. So, one option is to assume the money comes into my USD account, I add an expense for USD10 and then create a transfer between my USD account and my ARS account. The problem with this is that my cash flow is affected in a weird way. I mean, USD1000 comes in to my USD account, then USD950 comes out from my USD account, and also AR$57000 (or whatever the number is) comes in to my ARS account. All these movements affect my cash flow.
  6. The other option could be to just make those USD1000 come in directly as ARS into my ARS account (setting the correct currency exchange manually), but then I won't be able to create an expense for the USD10 that my client's bank charged in first place.

Is there a correct way of doing this? I appreciate the help!

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in Accounting Technical Support

Comments

  • BarsinBarsin Member, Moderator Posts: 2,041 ✭✭✭

    Hey @Isopo

    We at Wave are not accountants so I think you may get the best advice from someone who is a CPA, but I can offer my advice and you can experiment in your Wave account.

    1. First off you'll want to try to replicate exactly what is going on in your Wave account to what is happening in your real world bank account. (As long as this can be created in Wave). So creating a workaround like mimicking a deposit in a USD bank account which did not happen would not be wise according to most accountants.
    2. Your cash flow is meant to show the movement of funds (both money in and money out) of all of your accounts. So that is why adding an additional fake USD deposit would greatly affect your cash flow.
    3. Have you checked out the accounting for fees article?

    https://support.waveapps.com/hc/en-us/articles/115000472306-How-to-account-for-transaction-fees

    You'll want to take the fees off in ARS not USD since that what the transaction is being imported as!

    Hopefully this gives some insight, and don't hesitate to reach out if you need anything else!

  • IsopoIsopo Member Posts: 17

    Hey @BarsinA thanks for your answer.

    The instructions under that article (How to account for transaction fees) make total sense, the problem is Wave won't let me edit / split the transaction as I'm dealing with a multi-currency payment. I mean, the invoice is in USD but I get a payment that is directly converted into ARS. Then I'm unable to edit the transactions, so I'm back again dealing with the same problem from the beginning :(

    If you feel there is a workaround, please let me know. Thanks!

  • BarsinBarsin Member, Moderator Posts: 2,041 ✭✭✭

    Ahhhh I see @Isopo

    So I think the only unfortunate method here would be to change your invoice to what the converted amount is in ARS.

    I know this is a less than ideal workaround for our system however I do believe this is the only method for how to account for these fees :(

    Let us know what you end up going with.

  • IsopoIsopo Member Posts: 17

    Yeah @BarsinA I'll let you know if I come up with something else, but that seems to be the only method. I might try to see what happens if I do it the other way round... I mean, I can set my business currency to USD and still have all of my local transactions in ARS. I'll check it out.

    Also, not sure if this is the place to talk about this, but I'm having problems with the Google Sheet add-on to import transactions to Wave. It works great, but I've made several tests and it always import transactions using the wrong dates. For example, if I import transactions with the date 'November 7th' those will show up on Wave as 'November 6th'. So every transaction is being imported with 'date = 1 day prior to the real date'.

    I'm attaching screenshots!

  • AlexLAlexL Member Posts: 2,869 ✭✭✭

    Hey @Isopo . This is an identified issue that the team is aware of and will be testing to fix. In the meantime, if you change your timezone to EST (File > Spreadsheet Settings > Time Zone), it should solve your issue.

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