Discrepency due to international payment

TeaKayB

I’ve done some work for an overseas organisation so have received payment in AU$ instead of GBP. Due to a combination of bank charges at both ends AND currency conversion the money I have received is less than I invoiced even though the client paid what was asked. This means that reconciliation isn’t going to happen.

I’ve seen another post in which someone received less than what was invoiced due to bank charges and the advice was to create a payment to a personal account for the discrepancy amount (so that the full invoice appears paid) and then create an expense for that same amount and list it as a bank charge. I’ve started trying to do this but, of course, the expense can only be listed in GBP and not AU$. I’m not sure what the discrepancy is in GBP as I don’t know the specific exchange rate at the exact time of transfer, and I don’t know how much is bank charges and how much is exchange rate fluctuations.

How on Earth do I account for differences in the amount invoiced and the amount received when receiving money from international clients? This seems so complicated it’s hardly worth doing the international work!

Katie

Hi TeaKayB,

You’re on the right track following that advice. In your Crunch account, the invoice was raised in GBP. Even though payment was made in AU$, you’ll still record everything in GBP.

On your bank statement, you should see the amount from your client after it’s been converted to GBP. Record this as the payment against your invoice.

You’ll have an amount outstanding. Record another payment for this remaining amount, also in GBP. Then finally, record an expense in GBP for the same amount as the second client payment.

When you reconcile, you’ll match the first client payment against your bank statement. The second client payment and expense won’t need to be reconciled.

Hope this helps,
Katie

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