How to adjust the vendor payment via payment proposal and sending electronic payment files in other currency than what the bank is.

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Posted on by Camilla Broe

We have a case where we only have bank account in Danish Kroner (DKK) which is also the standard accounting currency. When paying vendor payments in foreign currency, we create electronic SEPA payment files in the foreign currency which the vendors invoice is posted in, requesting to our bank to pay the foreign currency to the vendor and then deduct the amount from the bank account in DKK. How am I able to record the payment in the foreign currency on the vendors account and then have the equal amount in DKK posted on the bank?

We are not informed of the exchange rate of the payment after the payment has cleared the bank account, which could be ½-1 day after bank receives the payment.

Is there a standard solution for the issue above?

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André Arnaud de Cal... 301,069 Super User 2025 Season 2 on at

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Hi Camilla,

I assume you did post the payment/disbursement file before you receive the information from the bank? In that case the differences can be posted to a gain or loss account when posting the bank statement information.

I don't know how this process is being done in Denmark. In the Netherlands we are usually not using the bank reconciliation features from AX, but we post daily a general journal (bank journal) with the bank account transactions. This includes the payment to vendors as well as customer payment receipts.

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Ludwig Reinhard Microsoft Employee on at

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Hi Camilla Broe,

Is it an option for you to wait with the posting of the payment journal until you get the information from the bank about the exchange rate to be applied? Once you know the rate you can enter it and post the journal. Note that this does not affect the generation of the SEPA payment file, which is independent of the journal posting.

Best regards,

Ludwig

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Camilla Broe on at

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Yes it is typical that we would create the electronic payment file, then send it to the bank and then await posting until approval for the bank transactions.

The issue is all though, that the amount of the payment is in EUR and our bank will send out the payment to the vendor in EUR, but the transaction posted/deducted from the bank account would be the equivalence in DKK. Therefor the vendors invoice in EUR is 100, our payment file is requesting the bank to transfer in EUR 100 to the vendor, we must settle the invoice on the vendors account with a in the amount of EUR 100 with exchange rate from the actual bank transaction and then the offset bank transaction in DKK. Does that make sense?

Vendor invoice

Vendor account: Credit EUR 100

Expense account: Debit EUR 100

Vendor payment

Vendor account: Debit EUR 100 (exchange rate 7,45 from the bank not the system rate)

Bank account: Credit DKK 745,00

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Ludwig Reinhard Microsoft Employee on at

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Hello Camilla Broe,

What you describe above - using the bank exchange rate to post the vendor payment - makes sense. Another alternative would to post the payment journal directly and then handle to FX-difference during bank reconciliation. Yet, the last option highly depends on how you do the bank reconciliation, whether you use add-ons for the bank reconciliation, etc.

The simplest way is what you describe above even though some accountants might not like seeing their journals unposted for 1-2 days. Other than that, I do not see any issue here.

Best regards,

Ludwig

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Camilla Broe on at

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Right now the issue is that the posting is in the follwoing way

Vendor invoice

Vendor account: Credit EUR 100

Expense account: Debit EUR 100

Vendor payment

Vendor account: Debit EUR 100

Bank account: Credit EUR 100 (this will be wrong as it is not what is posted in the bank, as it is only in DKK value)

Any way to make AX post in DKK instead?

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Ludwig Reinhard Microsoft Employee on at

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Hi Camilla Broe,

I do not think that you can have this posted in DKK and I believe it would not be correct doing that because SEPA is for EUR currency payments and you actually make the payment in EUR. So, the one who has to "suffer" is the bank account at the end of the accounting chain. Why can't you post in EUR on the bank account?

Best regards,

Ludwig

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Camilla Broe on at

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Hi Andre

Please see the correspondance I have with Ludwig.

Ludwig and I have a dialog in regards to the payment posting in EUR on the bank account in AX, when it is actually being withdrawn in the bank in DKK value of the EUR amount. Is they some functionality which allow the transactions to post in DKK on the offset account Bank?

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Camilla Broe on at

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Well when I say SEPA I mean that I am using the IS020022 export format and that can be used both for domestic, EU and 3 country payments.

We do make the payment to vendor in EUR, sometimes GBP or USD, the bank transfers the foreign currency to the vendor and deduct the equivalent value in DKK from our account.

No I can not post the transactions on the bank in EUR. If I post in EUR on the bank account in AX, then bank transaction is in DKK. That is wrong, both for reconciliation purposes but also value. So unfortunately that is not an obtion.

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Ludwig Reinhard Microsoft Employee on at

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Hi Camilla,

I see. What about using a bridging account that you setup in the method of payment in AP?

Based on your example this would look as follows:

Vendor invoice

Vendor account: Credit EUR 100

Expense account: Debit EUR 100

Vendor payment

Vendor account: Debit EUR 100 (exchange rate 7,45 from the bank not the system rate)

Bridging account Credit EUR 100

Bank reconciliation in GL journal

Bridging account Debit DKK 745,00

Bank account: Credit DKK 745,00

The bridging account would then hold the FX-effect and by running a foreign currency revaluation on this account you can get the balance on this account 0,00 and get the profit/loss posted on the foreign currency Profit/loss account.

Would that be a feasible option for you?

Best regards,

Ludwig

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Camilla Broe on at

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Yes that could work. I have tried to setup the bridging account for the payment method, although the payment file will not generate if the offset account is not Bank. Any suggestions for a workaround on that issue?

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