Payment account, currency and rate at creation time

What this does

When you create a cash purchase, you decide how you will pay the supplier (payment account) and in what currency. These choices affect the accounting entries and the amount actually paid. The payment account is typically a bank account, cash account, or prepaid vendor account. The currency determines which exchange rate is used if the supplier uses a currency different from your home currency.

Before you start

• You have the ability to create cash purchases.
• You know which payment account (bank, cash box, etc.) will be used.
• If paying in a different currency, you know the supplier's currency and the current exchange rate, or you trust Usystems to use the system-wide rate.

Steps

1. Open a new cash purchase form. Navigate to Purchases → New Cash Purchase Open in Usystems.
2. Add all items, quantities, discounts, and taxes to the purchase.
3. Look for the Payment Account section (usually below the items or on a separate tab).
4. Click the Payment Account dropdown and select the account from which payment will be made (e.g., "Main Bank Account", "Cash Box - USD").
5. The form may show a Payment Currency field. If so, select the currency in which you are paying the supplier (e.g., USD, AFN, EUR).
6. If the purchase currency (supplier's currency) differs from the payment currency:
   • The system may show an Exchange Rate field. Verify or adjust the rate if needed.
   • The system calculates the payment amount in your chosen currency using this rate.
7. Review the summary:
   • Purchase Amount (in supplier's currency)
   • Payment Amount (in the payment currency)
   • Exchange Rate (if applicable)
8. Save the purchase.

Accounting impact

When you create a cash purchase with a specific payment account and currency:

• Inventory (or Cost of Goods Purchased) is debited for the purchase amount in the supplier's currency.
• Payment Account (bank or cash) is credited for the amount paid in the payment currency.
• If the currencies differ, a Foreign Exchange Gain or Loss account may be involved, depending on whether the actual exchange rate differs from the recorded rate.
• The supplier's currency is tracked separately to support multi-currency accounting and reconciliation.

Tips & common mistakes

• Payment account choice: Select the account that actually holds the cash or credit being used. Do not select an income or expense account by mistake.
• Currency consistency: If your supplier primarily works in USD but you have AFN in your bank, confirm the exchange rate with your bank before recording the purchase. Usystems uses the system-wide rate unless you override it.
• Lock the rate at creation: The exchange rate you set during creation is recorded with the purchase. If the rate changes later, the recorded rate does not change automatically. Plan ahead if rates are volatile.
• Multi-currency reporting: If you pay in multiple currencies, your financial reports will separate them. Check with your admin or accountant to ensure this matches your reporting requirements.
• No currency conversion: If you want to pay in the supplier's currency, select that currency as the payment currency. The payment amount will be the same as the purchase amount.