Q: How Do I Do Business Accounting Online For Mult-Currency PayPal Transactions?
Here’s a bit of a complicated one for me. My objective is to record the full expense of EUR to USD transactions.
Let’s say my business received an invoice to pay for USD$100.
We paid that bill from our PayPal account. But at the time, we only had $25 balance in our PayPal account.
So what PayPal does is charge our Irish debit card for the Euro equivalent of $75. The market rate that day was €55, but we paid PayPal €60.
They then convert those €60 they’ve received into USD at a premium exchange rate, and finally use that to pay the balance of the $100 bill.
What do you think about using the following setup of accounts in Bullet to account for this?
- Create a “PayPal USD” bank account in Bullet
- Create a “PayPal EUR” bank account in Bullet
- Record the €60 as a bank transfer from our normal current account to “PayPal EUR”
- Record a $75 bill from “PayPal USD”
- Mark that bill as paid with the €60 from “PayPal EUR” (thus allowing Bullet to calculate the exchange rate expense to our business)
- Record a $100 bill from the external service provider
- Mark that bill as paid from “PayPal USD”
That doesn’t sound right, though, since it’s recording the expense twice – one for the $75 currency exchange, and the other for the actual $100 bill.
How would you suggest handling this transaction in Bullet?
(Our approach so far has been to have a “PayPal” account in Bullet denominated in Euro. Any charge to our bank’s debit card is recorded as a EUR transfer from our normal back account to “PayPal”. Any bill paid through PayPal in USD uses the default exchange rate for that day. However, I think that’s missing the cost to our business that PayPal includes in its EUR to USD exchange rate.)