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

I believe you are confusing exchangerate gains and losses. The spread
between buy and sell rates is a service fee, not a loss, this is what the
banks charge for converting money. The difference in buy or sell rates
from the time of invoice and time of payment is a gain or loss.


Dieter Simader    http://www.sql-ledger.org   (780) 472-8161
DWS Systems Inc.     Accounting Software       Fax: 478-5281
=========== On a clear disk you can seek forever ===========

On Sun, 20 Oct 2002, Joseph wrote:

> 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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