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How to add Bank charges in foreign currency

on 10/26/14, 5:45 PM 2,470 views

Business scenario is as below:

  1. Company Currency - INR
  2. Customer currency & Invoice Raised in USD say for Amount 1000 USD at a convesion rate of 50 say amount receivable in INR is 50000.00
  3. Customer does wire transfer of 1000, but customer bank charges 25 USD as bank charges. These bank charges should go to an Account "Bank Charges USD".
  4. Indian bank received 975 USD, and it further deducts bank charges say Rs. 500. These charges should go to an account "Bank Charges INR". Hope having two separate accounts for bank charges makes sense.
  5. Configured two separate journal a) "Misc INR" & other b) "Bank charges USD" with Bank charges USD as its default accounts.
  6. To receive the payment, I create a journal entry with following moves
    1. Customer A/C Credit for Rs. 48750   (@ 975x50)
    2. Bank Charges INR Debit for Rs. 500
    3. Bank A/C Debit for Rs. 48250     (48750 - 500)
  7. Above journal entry seems good only for 975 USD. But there I can not add entry of 25 USD. Of course I can calculate the amount in INR with the exchange rate of the day and make an entry in INR. But I dont think that is right practice.

Now I try create another Journal Entry with Bank Charges USD journal assuming journl and its entries/items will be considered in USD. So I debit Bank Charges USD for amount 25 and Credit Customer A/C for Amount 25, leave Amount currency field blank and choose currency as USD.  Once I post this journal, it only deducts 25 INR instead of 25 USD.

Can anyone please suggest what am I doing wrong here and what is the correct procedure to achieve above mentioned goal?


Techno-Functional Associate with 7+ years of experience in Odoo (formerly known as OpenERP).

On 10/27/14, 1:54 AM

All your Journal Entries must be passed in Company's currency, (in your case it is INR)...

And coming to payment, the journals which you have created looks fine.. when once you selected journal for USD, then you need not explicitly convert it to INR to make the payment... just finish the transaction in terms of USD only, when you validate the payment, and then if you see your Journal Entry, amount will be captured in INR... and in Amount Currency field, amount will be shown in USD...

Hence you need not worry for conversion.. do make sure the journal you have selected is pertaining to it...

Refer the doc: Managing Bank Statements


Deep, you have given a perfect answer, but here is a problem with "Conversion rate". All banks and government transactions may not follow the same conversion rate. For a day the conversion rate in our system may different from the conversion rate going to pay for invoice. Me also faced this problem. One solution i have is use the conversion rate field in payment screen to change the rate and reconcile difference amount with bank charges. For example you have invoice of $ 200, in that $ 5 is bank charges. Enter amount $ 195 for bank and reconcile $ 5 with bank charges, which is difference amount. These all can do in payment screen itself.

on 10/27/14, 2:41 AM

@samba, ya that is true, so thats where the Currency master & its conversion rates comes into picture, there you can add the conversion rates followed by date of change.. So when you confirm a transaction, then by default conversion rate will be considered on the date of the record.. if record date is none then it takes the current date ...

on 10/27/14, 10:25 AM
On 11/1/14, 2:01 PM

Thanks for your replies Deep & Samba.

Samba, for the rate conversion you can use the convery rate module and it will check the conversion rate of the day from the 3 exchanges and yahoo money. And if there is difference in the conversion rate that is calculated by OpenERP and actually given by your bank then it will be taken care by exchange loss & gain accounts.

Samba, adding bank charges or conversion rate in payment screen will require to customizing the module.

The issue that I am facing is even if I choose USD journal and enter the amount 25 in debit & credit columns even then the amount considered is INR. I.e. it impact 25 Rs. not 1250 Rs. (25x50).  Considering conversion rate for the day is 50.

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Asked: 10/26/14, 5:45 PM
Seen: 2470 times
Last updated: 3/16/15, 8:10 AM