Frequently Asked Questions about Foreign Currency
System
Posts: 412 admin
Frequently Asked Questions about Foreign Currency
Oops! This article is meant for a different version of Wave Accounting! You can search the Help Center for another article here.
Foreign exchange can be a tricky topic, but we try to make it easy...
0
Comments
Unrealized Loss on Foreign Exchange - was created by WAVE as a balance sheet (Liability) account. It is in fact an income statement account. As a professional accountant, how can I eliminate a trivial balance in the account at the end of the year?
Hi everyone!
I'm new to Wave Accounting and need help with figuring out how to balance Foreign Exchange Differences.
I have $1000 USD Cash. I've exchanged it to VND 23,250,000. However, once I accounted for this for my VND Cash account, it shows an overate of 0.88 cents (my Business Account is based in USD). I don't know how to account for this difference as I'm taking $1000 USD Petty Cash and Converted it to 23,250,000 VND Petty Cash. There is now an overage of $0.88 cents that I don't know how to account for. How do I write off this $0.88 without it affecting my balancing?
Please advise.
Hi @Rob_Farrow_CPA! Are you able to provide some further detail about the balance you are viewing? What type of transactions make up this balance? If you are able to provide any screenshots that would be helpful for us to have a better idea of what you are viewing and the possible next steps. Let us know!
@eeeluje I've merged your comment into this Help Center article that should get you on the right track in terms of balancing your account. The short of it is that you can create an adjusting entry that will ensure that the correction to the exchange rate is tracked in your bookkeeping!
How do I eliminate or recognize a fx gain or loss on a foreign dollar payable account that now has a zero balance. I report in CDN $ and I have a US $ accounts as well. I had a USD payable that is fully paid off however, when I look at the details it has in a bigger black font $0.00 (Canadian which is correct) and right below it in a grey smaller font $46.34 (which is USD). They both should be zero now, as there is no payable left. If I create a journal entry to recognize the fx gain/loss it will just change the payable balance in CDN dollars.
Hello, Wave,
Please, I need to zero my pounds account in accounting currency euro. The amount in pounds shows the correct of zero, however in euros it shows me a balance of €17.52. I tried the journal entry with foreign loss, but then I will see minus on my pounds bank account. How can I settle this in Wave?
Thanks.
Hi there @Larysa , thanks for reaching out! I'm so sorry for the struggle with foreign currency happening here. I can expand on what's happening, what to do about it in the meantime, and what Wave is working on to fix this in our next Transactions page rewrite.
When a foreign currency bank account reaches a zero balance in the foreign currency, there is usually a home currency balance in the account, due to foreign exchange rate fluctuations over time as transactions are recorded. If you zero out the balance in the business currency by creating a journal entry (the other side is gain/loss on foreign exchange), Wave calculates a corresponding foreign currency amount which is then recorded into the balance of the account. This means that ultimately, either the account will show a business currency balance (which is a 'phantom' account balance on the balance sheet), or the account will hold a foreign currency balance (which doesn't appear on the balance sheet, but then the bank account can't be reconciled as there is a 'phantom' transaction in the foreign currency).
We're working to make it possible for you to be able to update the business currency balance of a foreign currency bank account without also creating a foreign currency transaction amount. This would prevent your balance sheet and/or the account to have a phantom amount.
A workaround is to create a related functional/home currency “valuation” account, where you can make entries in the functional currency only, so the net of the valuation account and the bank account will be correct. We're working on automating this process, but in the meantime, this must be manually done by you. If you have further questions on the accounting principles of this, please reach out to an accountant.
Wave is currently building a transaction rewrite which will, in its final phase, include the tools needed to reconcile these ghost amounts. I don't have an ETA for this launch, but I can say that it is the current primary focus of the accounting product team. Thank you for your patience while we build this feature out to completion.
@CallieP ,
Thanks for your reply. Please, what Account Type do I select for the "valuation" account?
Your explanation seems to be clear, however, I have been struggling with this "valuation" account thing, but to no avail. I am still seeing the bank account not zeroed. The phantom balance does not go to forex loss account.
Hey @Larysa
The valuation account would need to be the same account type as the account which needs to be balanced. So if it's an asset account you're looking to revaluate, you can create an asset valuation account. Picture it like a placeholder account here you can store the balance away from your actual account. This is definitely a workaround and we appreciate your patience until we eventually give the option to change currencies in Wave.
@BarsinA
Thanks, it worked. I needed to balance my foreign currency bank account. So I created the same type of account with the name "revaluation" and placed the difference in home currency there (debit foreign loss, credit bank revaluation account). So the total of all money in bank is now correct.
I am looking forward to Wave improvement of these operations, and their automation.
Hi there I'm wondering if anyone can help. Are you able to show two currencies on an invoice? the business account currency and the exchange to another?
Hey there @rebelelement
Unfortunately you're unable to do that, however you might be able to manually show it by writing it in the description section? The problem with that is an invoice currency exchange changes daily with the market rates brought in by xe.com. So if you send me an invoice today with a currency rate of 1.5 USD to CAD, it might change by September 10th when I decide to pay it. Hope this helps!
Hi There. I have both a CAD bank account and a USD bank account. I conduct business in both USD and CAD. Wondering if I can invoice my US clients in USD and have them pay to my USD account and then also invoice my Cdn clients in CAD and have that deposited to my CAD bank account? Right now it keeps giving me the USD to CAD exchange rate which makes me think that it is only going to my CAD account?
Hi there @Camo , thanks for your message! I see that you're a Wave Payments user. Your Wave Payments can be made from any currency of account, but will only ever be able to deposit to one account, the one which is set up in your Payments onboarding. You can change this account in Settings > Payouts. If you have further questions about your payments made through Wave Payments, please speak to us on Live Chat or submit a ticket to our Support team, where a dedicated agent can provide you the timely support needed for this type of issue!
Hi some of our countries are not on xe.com and our currency is determined by the central bank, the xe.com figures are now distorting the value, of our transactions is there a way around this issuee. or cn we manually set our rtes
Hi @achitate , at the moment xe.com is the only provider that we use to determine the exchange rate. Can you provide us with an example of a country that you've mentioned above?
The BUG was found - Excahge rate for BYN in WAVEAPPS is different than rate on XE.COM
1USD =2.55535 BYN on XE.COM
1USD = 19475 BYN on WAVEAPPS
Please fix this
@achitate ahh interesting. This is the first time I'm hearing of this. I'm more than happy to pass your feedback along to the team.
Hi @alexshorkin , what's the date on the transaction itself? I want to double-check our system to see what's showing.
The BUG was found - Excahge rate for BYN in WAVEAPPS is different than rate on XE.COM
You can see bug on any date. It is still here
Excahge rate for BYN in WAVEAPPS is different than rate on XE.COM for every date
You asked "what's the date on the transaction itself? I want to double-check our system to see what's showing" - it was tried to made on 21 of October
1USD was =2.55535 BYN on XE.COM
1USD was = 19475 BYN on WAVEAPPS
Can anybody help with this?
The BUG was found - Excahge rate for BYN in WAVEAPPS is different than rate on XE.COM
You can see bug on any date. It is still here
Excahge rate for BYN in WAVEAPPS is different than rate on XE.COM for every date
You asked "what's the date on the transaction itself? I want to double-check our system to see what's showing" - it was tried to made on 21 of October
1USD was =2.55535 BYN on XE.COM
1USD was = 19475 BYN on WAVEAPPS
There is also problem with BYN currency - impossible to use decimals. When you try to enter transaction like 1.01 you simply can't save the transaction
Hey there @alexshorkin !
Can you please provide the date of the transaction. The reason I ask is because foreign currency rates fluctuate on a daily basis. Also, are you creating invoices or bills in a foreign currency? If so, I suggest taking a look at this Help Center article if you haven't already: Foreign Currency Invoices and Bills
Hey there @JulianP !
Thanks for your answer.
on 21 of October
1USD was =2.55535 BYN on XE.COM
1USD was = 19475 BYN on WAVEAPPS when trying to enter transaction in USD in business related to Belarus country (BYN currency)
You can try Any date! Today bug is still here. Exchange rate or BYN is different on XE.COM and Waveapps.
Please fix this!
We want to use Belarus business in Waveapps and USD accouns and transaction. We didn't try invoices or bills yet because of bug.
There is also problem with BYN currency - impossible to use decimals. When you try to enter transaction like 1.01 you simply can't save the transaction!
Hey @alexshorkin !
Could you please provide a screenshot from your account? Please include a screenshot of the entire page, including the URL bar, so that we can understand what's happening. You can feel free to remove or cover any sensitive information before sharing the image with me.
If I am looking at a balance sheet ending a certain day, what exchange rate does it use?
For example, I am looking at a balance sheet for May 31, 2019. The exchange rate Wave shows for USD to CAD is 1.2513.
On xe.com the exchange rate for May 31, 2019 is 1.3524 and today's is 1.2112.
So, where is Wave getting the 1.2513 exchange rate?