Taking payment in a different currency than the bill

What this does

Sometimes a vendor bill is issued in one currency (e.g., USD), but you pay them in a different currency (e.g., AFN). The system allows you to record the payment in the payment currency and automatically apply the exchange rate to settle the bill.

Before you start

• The bill exists and is in one currency (e.g., USD).
• You have permission to record payments.
• You know the payment currency and either the amount paid or the exchange rate to use.
• Your system has exchange rates configured (usually set by the administrator).

Steps

1. Open Bills and find the bill you want to pay. Open Bills

2. Click the Pay button to open the payment drawer.

3. In the payment drawer, you will see:

   • The bill currency and outstanding amount (e.g., 5,000 USD).
   • A payment currency selector: choose the currency you are paying in (e.g., AFN).

4. Enter the payment amount in the currency you selected. The system will:

   • Look up the exchange rate between the bill currency and the payment currency.
   • Show you the equivalent amount in the bill currency (for verification).
   • Apply the exchange gain or loss if the amount does not match exactly.

5. Verify the exchange rate is correct. If your system allows, you may be able to adjust the rate.

6. Select the account the payment came from (your AFN bank account, for example).

7. Click Save or Record Payment. The payment will be recorded in both currencies, and any exchange gain or loss will be posted to your accounts.

Accounting impact

When you pay a bill in a different currency:

• The bill is recorded in the original currency (USD) with the stated amount.
• The payment is recorded in the payment currency (AFN) with the amount you paid.
• The system calculates the exchange rate difference.
• If you pay exactly the bill amount at the current rate, there is no exchange gain or loss.
• If the rate has moved, an exchange gain or exchange loss is posted to a foreign-exchange account in your chart of accounts.

For example:

• Bill: 5,000 USD (created at 1 USD = 50 AFN = 250,000 AFN).
• Payment: 240,000 AFN (at 1 USD = 48 AFN).
• Gain/(Loss): (240,000 - 250,000) / 50 = 200 AFN loss (because you paid less than originally expected).

Tips & common mistakes

• Check the exchange rate before paying: If rates are volatile, a few days' difference can cost you money. Know the current rate.
• Partial payments in foreign currencies: You can pay part of a bill in one currency and the remainder in another, but the system tracks this carefully. Verify the outstanding balance after each payment.
• Do not convert manually: Let the system calculate the conversion. Manual conversions can create rounding errors.
• Document the rate you used: If your system allows, note the exchange rate you used in the payment memo so you have a record later.