Foreign currency: From original invoice to bank settlement

The three layers

The layers should connect, but they need not show the same euro figure. The difference may reflect exchange-rate movement, fee structure or an error.

Worked example

A USD 1,000 supplier invoice is valued at €910 under the method approved for the relevant accounting and tax purpose. It is paid later when the bank charges €925, including a separately identifiable €5 conversion fee. A simplified analysis may show €10 exchange difference and €5 bank fee: €925 cash - €5 fee - €910 liability = €10. Do not reuse these figures as a tax rule; the applicable valuation date, rate and fee evidence must be confirmed.

Source-to-result transformation in DeinHans

1. The USD invoice enters with its original amount, currency, supplier, invoice and service dates intact.
2. The accountant’s approved conversion basis supplies the relevant source, date or month and method; the software does not choose one because it makes reconciliation easier.
3. DeinHans records or calculates the reproducible €910 prepared value from those approved inputs while preserving USD 1,000.
4. The later €925 bank debit is proposed as settlement. The stated €5 fee is separated and the remaining €10 difference is shown for review.
5. The handoff contains original source, applied basis, calculation, payment and reviewer—not merely the final euro total.

DeinHans can preserve currencies, perform transparent arithmetic from approved inputs and prepare the match. It does not determine the statutory VAT conversion method, accounting valuation policy or period-end treatment autonomously.

Conversion workflow

1. Record document currency, amount, invoice date and performance date.
2. Identify which date governs the specific accounting or VAT calculation.
3. Use an approved, reproducible rate source and retain evidence of it.
4. Post or record the initial euro value without deleting the original currency.
5. Match the later settlement and separate explicit fees.
6. Calculate the remaining exchange difference independently.
7. Reconcile open foreign-currency balances at period end.

German VAT law generally refers to published monthly average rates for the tax calculation under §16(6), with specified alternatives and exceptions. Financial accounting valuation can raise additional questions. Align the method with the adviser and apply it consistently.

Warning signs

• The report silently converts all history using today’s rate.
• Original currency disappears after import.
• A bank fee is included in the exchange difference without evidence.
• Several currencies share one unexplained clearing balance.
• A manual euro amount cannot be reproduced from a rate and date.

Professional boundary: VAT conversion, initial recognition and period-end valuation are related but not identical decisions. Have the applicable method confirmed for the business and transaction type.

Review-ready evidence

A reviewer should be able to see original document, currency and amount, applied euro value, rate source and date, settlement, fees and calculated difference. Software can preserve and recalculate this chain. It should not replace a missing rate policy with whichever value happens to make the bank reconcile.

Period-end open balances

List every material foreign-currency receivable, payable, bank or processor balance with original amount, initial euro carrying amount, closing currency amount and the valuation method approved by the accountant. Distinguish realized differences created by settlement from unrealized period-end valuation movements. Reconcile any reversal or continuation in the next period.

Do not translate only the net total if individual items use different dates or belong to different currencies. A USD receivable and USD payable may offset economically, but their documents, due dates and tax evidence still remain separate.

Rate-source controls

Retain the rate publication or provider evidence, applicable date/month, quotation direction and calculation precision. Test whether the rate is expressed as euros per currency unit or the inverse; an inverted rate can produce a plausible-looking but materially wrong result. Document rounding at the appropriate final step rather than rounding every intermediate line inconsistently.

Settlement differences checklist

• Did the bank use the same currency amount as the invoice?
• Is a conversion or transfer fee stated separately?
• Was the invoice partly paid or netted with a credit?
• Did the provider convert before the bank settlement?
• Does the residual belong to rate movement, fee, rounding or missing evidence?

Only the evidenced remainder should become an exchange difference. An unexplained amount stays open for review.