In FirstBit ERP, the Transfer Fee is the bank or payment system commission for processing a Money Transfer.
It is recorded separately from the transfer amount and shown as an expense in accounting.
The Transfer Fee can either:
It also affects the final amount deducted from the sender or received by the recipient, depending on the selected method.
The Transfer Fee tab is used to record any additional expenses related to a transfer, including those arising from foreign currency transactions.
When transferring funds between accounts in different currencies, the system automatically provides the Transfer Fee field, allowing you to enter any conversion costs or bank charges associated with the transaction.
The system applies the official exchange rate for the transaction. However, if the transfer is processed using the bank’s commercial rate, which differs from the official rate, the resulting difference is treated as a bank expense (bank margin) and should be recorded in the Transfer Fee field.
Transfer Fee = (New Amount in Source Currency × Current Cross Rate) − (Amount in Target Currency)
Where:
1000 * 0,22 - (1000* 0,236 (initially set course) = 16,19 * 4,23388 = 68,54
1). Before change Transfer Amount (before recalculation cross-currency rate):
2). After changing Transfer Amount - Transfer Fee field is recalculated due to changes in the exchange rate (bank’s commercial rate):
A foreign exchange difference arises due to a change in the official exchange rate between two moments:
earlier — when the balance was initially recognized, and
current — when the transfer or revaluation is performed.
The balance is recalculated using the current exchange rate and compared to its earlier value. The resulting difference is automatically recognized as an exchange gain or loss.
When processing a Money Transfer, the system applies the exchange rate valid on the document date and compares it with the previously recorded value. Any difference is recorded as income or expense.
Formula:
Exchange Difference = Previous Balance × Previous Rate − Previous Balance × Current Rate
Example:
50,000 × 4.310952 − 50,000 × 4.233917 = 3,851.75
To verify balances in both the foreign currency and the accounting currency, as well as to ensure the correctness of exchange rate difference calculation, please use Cash Assets Balances report (Money - Reports of money - Cash Assets Balances)
Thus, the exchange rate happens when there is variance on the official rates used in the previous document when compared to current document.
More details about the calculation of exchange rate differences can be found in the manual at the link below.
Overview of Exchange Rate Difference Calculation
Please note that, depending on your accounting policy, you may independently select the expense GL account used to record costs related to transfers.
The system does not impose any restrictions on GL account selection — you are free to use the GL account defined in your accounting methodology.
From the program’s side, there are no limitations regarding the choice of account.
Thank you for being a FirstBIT customer!
#MoneyTransfer #BankTransfer #TransferFee #CurrencyConversion #ExchangeRate