Re: what people would like to see; was (no subject)

On Sat, 2002-10-19 at 18:26, R Ransbottom wrote:
> On Fri, Oct 18, 2002 at 01:30:32AM -0600, Joseph wrote:
> 
> > One thing I would like to see is truly multi-currency accounting system.
> 
> > I'll try to be as short as possible.
> > We sell our products Internationally, so our preference is to keep
> > prices in USD.  Our inventory is in USD as well and it stays this way,
> > as some prices are sensitive so converting it to local currency
> > (Canadian Dollar) would generate a loss as difference between selling
> > and buying USD is about 0.08 on each dollar (our loss).
> 
> I am in the US so my view may be skewed.
> Accounting here is based on the stable currency precept.  
> That implies books kept in one currency.
> 
> Are you maintaining accounts in both currencies?

Yes, we have a USD Account and CAD Account.  All credit card sales are
converted to Canadian Dollars (and deposited to CAD Account; we can not
charge customer credit cards in USD as we do business in Canada, even
though we would like to. But it might change one day, as banks are
adopting to customers needs.); almost all Invoice Sales are in USD so we
get paid in USD and deposit to USD Account.  Though we need to convert
the total at the end of the year to Canadian Dollars to file income
tax.  But this is done manually.  
 
> Are you banking and disbursing both currencies?

Yes we banking in both currencies as most our local bills are in
Canadian Dollars and we pay our suppliers almost exclusively in USD.
 
> I am confused as to what you are doing and what you wish to do.

Yes, it might be hard to understand as you are in USA and you banking in
USD so there is no need for conversion.  But international companies who
do business in different countries in USD will understand the issue.

I'll try to give a simple example:

We buy an item that cost us 10.00USD (for inventory); we sell this item
to a customer on credit card in Canadian Dollars. 
So our calculation is a follow, markup 20% so we sell it to a customer
at 12.50USD. 

At one point in time we need to Sell or Buy USD.
Exchange: Buy rate is 1.60CAD = 1.00USD (if we need to buy USD)
Exchange: Sell rate is 1.55CAD = 1.00USD (if we need to sell USD)

If you go to a Bank and buy one USD, the bank will charge you 1.60
Canadian dollars. 1min. later you sell your 1.00USD to the bank, they
will pay you 1.55USD.  You lost 0.45 cents on each dollar you convert,
this is one way banks make profit.  Here is Royal Bank Exchange
converter if you want to check it:
http://www.royalbank.com/cgi-bin/travel/fxconvert.pl

So in order for you to buy this USD at 1.60 Canadian you need to charge
customer 1.645 as exchange rate, or it will be you loss (your profit
will not be 20% anymore).  I hope this is clear.

So here is the calculation (remember our inventory is in USD and we do
not convert inventory to CAD as our currency is not stable enough, our
dollar jump from 1.52 to 1.64).

---------- Profit / Sales Report ------------------

Sales: (12.50 x 1.645) = 20.56 CAD on credit card
COGS:                    10.00 USD
----------------------------------
Profit:                  10.56 ???   

This is the way QuickBooks print my report.  And as you might guess this
is incorrect as QuickBooks does not convert automatically COGS (cost of
good sold) to Canadian Currency.  

QuickBooks has a multi-currency feature, we tried it. It is useless.  If
my home currency is Canadian Dollars they automatically assume my
inventory will be in Canadian Dollars (and this is not the case).  If we
issue a PO our prices on the PO would be showing in Canadian Dollars and
we buy our inventory mostly in USD.  
They way some companies manage it, they run two sets of Books one in USD
and in Canadian Dollars but we can not as we stock many items and we
need to know what we have in stock if customer calls, so we need
accurate inventory. 
We manged some of this problem with a help of Classes in QuickBooks. 
All transaction are either Class USD or Class CAD; at the end of the
year we have tow reports on in USD and on in CAD.  The one in USD is
correct as the COGS is in USD but on the Canadian Dollar report we need
to convert manually COGS to Canadian Dollar.

If the above transaction we sell to a customer on Invoice in USD, the
calculation will be correct:

---------- Profit / Sales Report ------------------

Sales:        12.50 USD on Invoice
COGS:         10.00 USD
----------------------------------
Profit:        2.50 

Intuit (QuickBooks) is a Canadian Company and we hoped they would
understand the issue but it seem to me they don't.  They don't even want
to listen to customers suggestion, if you try to talk to them first they
ask, what is your credit card number to charge you a service call.

Dieter, is based in Canada Edmonton as well so he should understand this
issue but he just go with the flow.  

Someone suggested Compiere:
http://www.compiere.org/index.html

I just start to looking at it and it is very flexible and might do what
we need but there will be learning curve.

I hope it is a bit more clear now.
 
> Real desires are sometimes difficult to formulate as practice is a
> compromise between the accountants, the bookkeeping program, the
> bookkeepers, and the principals.  And none of these have enough of
> the picture to do more than modify current practice a bit.
> 
> > In addition if we generate a PO it is in USD so the pricing stays the
> > same.  
> 
> > We sell and buy our products in USD to many Canadian customer as well,
> > so we need to manually make an adjustment to (tax) GST.
> 
> This seems not a currency issue.

No this is not the currency issue, but it is part of the accounting
package.

> Would you accept $CA against such a bill?

Yes we would, but we would have to markup such transaction up by 0.045
cents on each dollar and if the bill is 10,000USD this is an additional
450CAD charge to customer and they don't like it.  
We need to mark it up as we have to sell the Canadian Dollars and buy
USD to purchase inventory.  

In addition we do Barter trade as well, but this is another issue.

Regards,
Joseph




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