Set up to record Foreign Currency Stock Purchases

What you need to set up to record foreign exchange transactions when importing stock from an overseas supplier.

Overview

Payable Manager

Currency

Rate of Exchange

Account Type Group for Overseas Suppliers

Set up the Supplier Account

Overview

When you order goods from an overseas supplier, there are settings you need to be able to record your imported purchasing transactions.

You need to account for paying invoices with no tax, and recording the foreign currency amount as well as the amount in your local currency.

When goods are imported, there are additional freight charges, GST, Customs charges, duty and fees and GST on these charges. You need to set up fields to record these costs.

These additional items affect the cost of your stock items. Therefore to give you a true picture of the cost of these stock items, these additional costs are apportioned to the costs of the items ordered and then the Branch average cost of the various items is updated. Note that GST is not included in the costs to be apportioned to the Stock average cost, as you can claim back the GST.

There may be rate of exchange differences between the time you receive the invoice and the time you make the payment. To read about how to manage Rate of exchange adjustments, refer to Managing Exchange Rate Differences.

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Payable Manager

• Start at Settings > Payable Manager.

In the Foreign Purchasing details section:

• Customs gst gl account: This is the General Ledger account to use for GST on Customs fees.
• Freight gl account: This is the General Ledger account to use for freight on your imported goods.
• Freight gst gl account: This is the General Ledger account to use for the GST on freight.
• Tax code for no gst: This is the Tax Code to use when there is no direct Tax (GST) on the invoices for imported goods. (GST is added by the NZ Customs, and is posted to the Customs GST GL account.) 

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Currency

You need to set up the Currency in which you will be paying the overseas Supplier.

• Go to Settings > Currencies.
• Click New Currency.
• Code: Enter the Code: e.g. USD.
• Description: Enter the description; e.g. US Dollars.
• Click Confirm.

This will take you to the Currency Details screen where you can set up the rate of exchange. If you have an existing currency and you need to update the rate of exchange, all you need to do is update this rate of exchange.

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Rate of Exchange

You can set the Rate of exchange to be used for transactions in this foreign currency. The same rate of exchange will apply until you set up a different one at a later date. If you don't have many transactions, you can use the same rate for a month, or you can update this more frequently if you wish.

• Go to Settings > Currencies.
• Select the Currency you want to update.

In the Exchange rate section:

• New date: Enter the new date for this rate of exchange to apply from; e.g. today's date.
• New rate: Enter the new rate of exchange.
• Click Save new rate.
• Click Save and close.

Your new rate of exchange will now display in the Exchange rate details section. This rate will be used until a new rate for a new date is entered.

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Account Type for Overseas Suppliers

You need an Account Type Group that specifies a Tax Code of No Tax.

• Start at Payables > Account Type.
• Click New Payable Account Type.
• Code: Enter a code. In this example we've called it OVERSEASSUPPLIERS.
• Description: Enter a description, e.g. No GST for Overseas Suppliers.

Account Transaction Type section. These are set up on Settings > Account Transaction Types.

• Invoice: Select INV from the dropdown list.
• Credit: Select CRD from the dropdown list.
• Journal: Select JNL from the dropdown list.
• Cash receipt: Select REC from the dropdown list.
• Cash payment: Select PMT from the dropdown list.
• Prompt payment: Select PROMPT from the dropdown list.
• Transfer: Select TRF from the dropdown list.
• Writeoff: Select WRTOFF from the dropdown list.
• Direct debit discount: Select DIRDEB from the dropdown list.

Default Setting section

• Currency: Select from the dropdown list; e.g. US Dollars.
• Company: Select from the dropdown list.
• Branch: Select from the dropdown list.
• Department: Select from the dropdown list.
• Tax: Select from the dropdown list; e.g. No TAX. This then allows you to process the incoming invoices that have no Tax / GST.
• Click Save.

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Set up the Supplier Account

The Payable Account (Supplier) should be set up with the Account Type you have set up for No Tax, and the correct foreign currency to pay this Supplier.

• Go to Payables > Supplier Accounts.
• Select or add your Supplier.

In the Details tab > Details section:

• Account Type: Select the Account Type you have set up for Overseas Payables (No Tax).
• Currency: Select the required currency for this Supplier.

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