Any FreeAgent Experts?

[Fee Agent]

I have contacted FreeAgent support and didn't quite get the answer I was looking for so thought I'd ask here. I will use any information I receive here to further my query with them!

It's about how FreeAgent records payment in a different currency via PayPal.

I get paid in USD into my PayPal account which I then withdraw into my UK bank account with PayPal converting the USD into GBP.

PayPal charges a fee for receiving the payment which FreeAgent recognises through the PayPal feed of transactions from my account.

However, when I withdraw the money from PayPal into my business account, PayPal doesn't use the real exchange rate, but their own less favourable (for me) exchange rate.

But I don't think FreeAgent notices the lower exchange rate from PayPal - so it looks like I'm earning more than I am?

So if I got paid $500, PayPal would take $30, and I presume FreeAgent would record that I earned $470.

Today that is £360 so according to FreeAgent I earned £360, but really I ended up with £320 (rough guess) due to PayPal's low exchange rate.

Does anyone know how or if FreeAgent records this?

Does FreeAgent look at the money coming into my UK bank account as the earnings? Or the money I receive into PayPal as the earnings?

Any advice much appreciated. Thanks.

 

[Scalloway]

So if I got paid $500, PayPal would take $30, and I presume FreeAgent would record that I earned $470.

.

You earned $500, with costs of $30.

The difference in exchange rates is another cost for your business.

 

[Chart Accountancy]

Hi

If I understood correctly, you maintain two accounts in FreeAgent, $ PayPal account and £ bank account. You will explain the receipts in your PayPal account as money in_sales. The transfer to your current account will be just a transfer between two accounts. If you have a bank feed for the two accounts, you will need to explain the Transfer in FreeAgent only through one of your accounts which will create an automatic corresponding entry in your other account so you will need to manually delete the uploaded entry in this other account to avoid duplicates. Your $sale in FreeAgent will be translated in £ using the FreeAgent exchange rate and the difference between what your bank paid in £ will be foreign exchange loss or gain.

 

[TheCyclingProgrammer]

Your earnings in GBP will be determined by the exchange rate on the day you made the sale/invoice date, or if you're using cash accounting the day you received the money into your PayPal account.

Any further losses when converting to GBP when you transfer that money to your UK bank account should be treated as a currency loss expense.

Example: you sell something today for $100 and receive payment of $70 into your PayPal account. That $70 should be explained as a sale of $100 and an expense of $30 (the PayPal fees). FreeAgent should use today's exchange rate to show a sale of approx. £77 and an expense of approx. £23 leaving you with £54.

You then transfer this into your bank account several days later and after conversion you end up with £52 meaning you've made a currency loss of £2. I confess I'm not sure how FreeAgent deals with cross currency transfers though.

 

[Fee Agent]

You earned $500, with costs of $30.

The difference in exchange rates is another cost for your business.

Thanks. FreeAgent detects the fees so it shouldn't be a problem recording them for the end of year report.

Do you know if there is any way to find out and record the difference between the exchange rate used by FreeAgent (from XE) and PayPal (retail exchange rate) in FreeAgent?

In FreeAgent, for one recent invoice, it says I received $506 and that the Net amount was £388.16 using the Exchange Rate from XE - but when I withdrew that money from PayPal into my bank account I would've gotten less than that thanks to PayPal's lower exchange rate.

Is there any way to record that difference or should I just let it go?

Thanks.

 

[Fee Agent]

Hi

Your $sale in FreeAgent will be translated in £ using the FreeAgent exchange rate and the difference between what your bank paid in £ will be foreign exchange loss or gain.

Thanks, but I'm not sure FreeAgent is recording/detecting the exchange rate loss due to PayPal's lower exchange rate.

 

[Fee Agent]

You then transfer this into your bank account several days later and after conversion you end up with £52 meaning you've made a currency loss of £2. I confess I'm not sure how FreeAgent deals with cross currency transfers though.

Yes, how or if FreeAgent records the difference in exchange rates from what they use and what PayPal uses is where I'm confused! Thanks though.

 

[TheCyclingProgrammer]

Yes, how or if FreeAgent records the difference in exchange rates from what they use and what PayPal uses is where I'm confused! Thanks though.

Looking at this, it seems to suggest you can manually set the converted amount in the target of the transfer's currency:

https://www.freeagent.com/support/kb/banking/migrating-to-a-foreign-currency-bank-account/

 

[Fee Agent]

Thanks, will check that out.