Use of foreign currency exchange

MichaelBG

Hello everybody,

I'm wondering how to correctly create a transaction for a foreign currency exchange.
I convert 100$ to 77£ but if I use Gain on foreign exchange and Loss on Foreign Exchange for the 2 transactions (-100$ and +77£), the major part of my expenses or income breakdown will be the foreign currency exchange.

How can I label it as neutral and not income or expense ?

Thanks in advance

Barsin

Hey there @MichaelBG

What would really help is a use-case scenario of what this looks like in real life. Am I correct in assuming you've converted $100 USD to GBP and the result was £77?

Wave usually pulls in daily foreign exchange rates from xe.com so if the conversion that happened in real time does not coincide with the balance in your Wave account pulled in from xe.com, you'll want to move the difference into a foreign gain or loss account using a journal transaction.

Hope this helps!

MichaelBG

Hello @Barsin and thanks for the reply

Here is a detailed example :

• My main currency is £ and all will be converted in £, that's not an issue
• But let's say I sell in the USA and receive a payment of 100$
• As I want to pay my contractors, here in the UK, I need £
• I the convert in the bank the 100$ to 77£

I'll then have 3 lines in my accounting
1. Receive 100$ : + 100$ => categorized as Sales
2. Change 100$ : -100$ => categorized as foreign exchange loss ?
3. Change 100$ : + 77£ => categorized as foreign exchange gain ?

And since I work with many currencies, at the end of the month, the majority of my income breakdown will be "foreign exchange gain" and the majority of my expense breakdown will be "foreign exchange loss"

How can I categorized the exchange to avoid that ?

Barsin

Hey again @MichaelBG

This is a bit complicated and I feel like some screenshots of the said transactions may help me actually!

Let’s say that you’re moving money from your US checking account to your UK checking account, and you have both of these accounts linked to Wave to import transactions automatically.
Send the money to the UK bank account. When this happens, you’ll see money leave the US checking account, and money come into your UK checking account. These two amounts aren’t the same, since they’re not in the same currency.

When both of the transactions import, go to either of the sides of the transfer and categorize it as a Transfer from/Transfer to. You’ll see the other half of the transaction appear as an option in the drop-down menu. Select it from the list, and Wave creates the transfer for you. likely resulting in three transactions.

This article has a bit more info on this.