Document currency vs payment currency

Document Currency vs. Payment Currency

What it is

A document (invoice, bill, purchase order, or sales order) and its payment can be in different currencies. The document shows what was owed or payable at the time of the sale or purchase in a specific currency and exchange rate. The payment is what actually changed hands—and it may have been in a different currency, using a different exchange rate.

Why it matters

Exchange rates move constantly. If you issued a USD 100 invoice to a customer when the rate was 1 USD = 85 AFN, the invoice shows AFN 8,500 equivalent. But if the customer pays you two weeks later when the rate is 1 USD = 88 AFN, they pay you USD 100 (which is now worth AFN 8,800). That AFN 300 difference is an exchange-rate gain and must be recorded in your accounting to keep your books accurate.

How it works in Usystems

1. Document creation: When you create an invoice, bill, or order in a foreign currency, the system records both the foreign amount and today's exchange rate. It calculates the local-currency equivalent for your records.

2. Payment entry: When you later record that the document was paid, you enter the currency and amount of the actual payment (e.g., USD 100 received, or EUR 50 paid out). Usystems compares this to the document's original exchange rate.

3. Gain or loss calculation: If the exchange rate has moved:

   • Gain: You received more local currency than the document showed (or paid less local currency). This is recorded as exchange-rate gain.
   • Loss: You received less local currency than the document showed (or paid more local currency). This is recorded as exchange-rate loss.

4. Automatic posting: The exchange-rate gain or loss is posted to a dedicated account in your chart of accounts (usually Foreign Exchange Gain and Foreign Exchange Loss). Your admin controls which accounts are used.

Where you see it

• When viewing a paid Invoice or Bill, you see the document currency, the payment currency, and any gain or loss.
• In Reports → General Ledger or Trial Balance, you see entries in the FX-gain and FX-loss accounts if your documents were paid in a different currency than they were issued.
• On Contact ledgers and Aging reports, foreign-currency amounts are shown both in the original currency and converted to local currency.

Example

• Jan 1: You issue Invoice #100 for USD 1,000 at a rate of 1 USD = 80 AFN. The invoice shows AFN 80,000.
• Jan 15: The customer pays USD 1,000, but the rate is now 1 USD = 82 AFN. They have paid the full USD amount.
• Result: The invoice is fully paid, but Usystems records an AFN 2,000 exchange-rate gain (because you received AFN 82,000 equivalent instead of the AFN 80,000 you expected).

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