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How Do I Record A Sterling Receipt for Foreign Currency?

You may have an overseas customer who wishes to be invoiced and pay in Euros and you only have a Sterling account.

When the customer pays you will get an advice from your bank, showing the Euro value, the Sterling equivalent and the bank charges.

  1. Enter the bank charges as a nominal payment in the cash book.
  2. Enter the Euro value on to the Customer Account at the rate of exchange invoiced. – see FAQ – How Do I Record a Supplier Invoice Payment in Foreign Currency? – the principle is exactly the same.
  3. Calculate the exchange difference (Sterling amount received + bank charges – Sterling amount posted to customer) and post this as a nominal payment or receipt to the exchange difference account.

When you process the bank reconciliation you will see three entries in the cash book relating to that one transaction.