Introduction
In the world of business, global transactions are a common occurrence. As a result, fluctuations in exchange rates can significantly impact your financial records. Empress provides a user-friendly solution to this issue, allowing you to seamlessly manage transactions in foreign currencies.
In Empress, when you create a transaction in a foreign currency, the system automatically computes the current exchange rate based on your company’s base currency and the currency of your customer or supplier. However, exchange rates are constantly changing, and the rate at the time of receiving payment might differ from when the Sales or Purchase Invoice was issued.
This guide guides you on managing these differences due to exchange rate changes, ensuring your records remain accurate and up-to-date.
Feature Name: Exchange Gain/Loss Account
This feature is designed to handle the difference in currency amounts due to changing exchange rates.
Creating an Exchange Gain/Loss Account
- Navigate to the “Accounts” section of your Empress dashboard.
- Select “New” and then “Account”.
- Name the account “Exchange Gain/Loss”.
- Typically, this account should be created on the Expense side of the Profit & Loss (P&L) statement. However, you can place it under a different group based on your specific accounting requirements.
The Exchange Gain/Loss account will serve as a central hub for tracking differences in currency amounts due to fluctuating exchange rates.
Booking Payment Entry
- Navigate to the “Sales” or “Purchase” section of your dashboard.
- Select the transaction for which you’ve received payment.
- Click on “Payment Entry” and then “New”.
- The system will automatically calculate the Exchange Gain or Loss based on the current exchange rate and the rate at the time of the invoice.
The difference will be reflected in the Exchange Gain/Loss account, effectively managing any potential discrepancies caused by fluctuating exchange rates.
Conclusion
Managing transactions in foreign currencies can be a daunting task, especially with constantly fluctuating exchange rates. Yet, with Empress’s Exchange Gain/Loss Account feature, you can handle this task with ease. By creating an Exchange Gain/Loss account and booking your payment entries, you ensure your financial records are accurate and up-to-date, providing a clear and precise understanding of your financial position.
Remember, the Empress support team is always here to help should you need assistance. Feel free to reach out to us for further guidance on managing foreign exchange differences or any other feature in Empress.