Handling Unallocated Amounts and Exchange Discrepancies in Multi-Currency Payment Entries

[melhembitar]

Information about bug

Process Overview in Bullet Points: Multi-Currency Setup:

CAD is the base currency, and payments can be made from foreign currency bank accounts. Payment Preparation:

When creating a payment entry from a foreign currency bank account, the system calculates the amount based on historical exchange rates, sourced from online platforms.

Unallocated Amount: The calculated amount difference (between the base currency and foreign currency) is placed in the Write-Off section as "Unallocated Amount" in the supplier's currency. This represents the discrepancy between the actual payment amount and the amount registered by the system. Adjusting Unallocated Amount:

User Action Required: The user must adjust this "Unallocated Amount" to match the exact amount received by the supplier. Risk: If the user skips this adjustment, the payment may be saved incorrectly, resulting in a discrepancy on the third-party account. Exchange Gain/Loss:

Once the unallocated amount is adjusted, the "Set Exchange Gain/Loss" button becomes active. The user can then specify an FX Gain/Loss account, which ensures the accounting entry reflects the actual currency exchange difference.

Diagram: Multi-Currency Payment Entry Flow. point 4 if not done it ll cause the problem in question

Start | v

1. Initiate Payment Entry
   • Select Bank with Foreign Currency | v
2. System Calculates Amount
   • Uses Historical Exchange Rate | v
3. Register Unallocated Amount
   • Difference shown in Write-Off Section | v
4. User Adjusts Unallocated Amount
   • Match exact amount received by supplier
   • Avoids discrepancies in supplier account | v
5. Set Exchange Gain/Loss
   • Activate "Set Exchange Gain/Loss"
   • Enter FX Gain/Loss Account | v End: Entry Reflects Accurate Foreign Exchange

Module

accounts

Version

ERPNext: v15.39.2 (HEAD) - Frappe Framework: v15.45.0 (HEAD)

Installation method

None

Relevant log output / Stack trace / Full Error Message.

No response

[sagarvora]

Proposed Solution

The logic to calculate unallocated_amount is incorrect. It needs following corrections:

• Consider base_paid_amount instead of base_received_amount for calculation when Payment Entry is of type Receive. And vice-versa for Pay.
• Don't consider the deduction row related to Exchange Gain / Loss when calculating the Total Allocatable Amount. All other deductions like Cash Discount will still be considered.

The following additional changes are proposed to do above properly:

• Add a checkbox Is Exchange Gain / Loss? in Payment Entry Deduction. The row with this checkbox will be excluded for the purpose of calculating unallocated_amount.
• (slightly breaking change) Remove the Set Exchange Gain / Loss button. Instead, automatically calculate the Exchange Gain / Loss as the difference between base_paid_amount and base_received_amount and add the row for Exchange Gain / Loss in Payment Deductions or Loss table automatically in the client side and while saving. This row will also be auto-updated whenever exchange gain/loss changes and during save. Removal of this row will not be permitted, but changing account and cost center will be possible.

---

Another approach that is possible is to not add exchange gain / loss in the Deductions table and create separate fields for that. But that will be more breaking.