Accounting Foreign Exchange conversions between accounts in Wave
I'm just getting started with Wave. So far I'm really impressed by the interface and ease-of-use!
I have run into one error though that I really can't wrap my head around. I'm a complete accounting novice, so sorry in advance in case I don't understand some of your advice!
I am a sole trader working in the music industry. I invoice clients in multiple currencies, but this is usually limited to GBP (my home currency), EUR (most common), and USD (least common).
For business purposes, I bank with Transferwise. This is because they have by far the cheapest currency conversion out there. E.g. I receive a €500 payment into my Transferwise Euro account in EUR, and whenever I need to, I will convert it into GBP (at mid-market rate with a minimal fee) to be able to pay myself my "dividend" or whatever else you'd name it.
I have created "Cash in Hand EUR" and "Cash in Hand USD" to receive any foreign currency payments. In preparation of doing my taxes, I am in the process of loading in some of my past work by mocking up an invoice for the exact amount (without sending to the client) and creating a manual transaction to receive the payment on whatever date that may be that I was paid. Wave will then know what I earned for the tax year. All good so far.
My problem arises when I try to account for the fact that I have converted from one currency to another in Transferwise. I received a payment of €500 on 1st September 2017. It was received into my TransferWise EUR account, so I 'received' the payment in Wave into 'Cash in Hand EUR'.
I now want to tell Wave that I converted the fee into my Transferwise GBP account. So I go to create a journal transaction from "Cash in Hand EUR" to "Cash in Hand" (system account - for GBP). I want to tell Wave that I transferred €500 from my Transferwise EUR account, minus a €3.03 fee that Transferwise deduct, and received £457.91 into my Transferwise GBP account, as this is exactly what happened.
I go to my transaction list for "EUR Cash in Hand" to create a journal transaction. I'm now finding that Wave won't create a journal transaction in Euros here, even though the chart of accounts in question is set to euro currency?? It doesn't make sense for that chart of accounts to acknowledge that EUR payments received, but then expect me to do the arithmetic and calculate the values in GBP to make journal entries? That would mean I have to manually check the exchange rate on each date, calculate the GBP equivalent for the Transferwise fee and payment amount and enter those in manually !
Taking out the currency issue in Problem 1, it then doesn't seem like Wave would have the functionality to input that "EUR Cash in Hand" SENT a payment of €500, but the "Cash in Hand" account RECEIVED a lesser amount of £457.91 (because of foreign exchange and small fee).
Entering anything like that just throws up an 'Unbalanced!' error in red. The numbers obviously ARE 'balanced' in real life, as those are the realised amounts that I actually physically got, but it's clear that Waves wants to see -500 in one account, and +500 in the other, no exceptions.
Am I missing something? I really can't tell how I should be transacting the amounts between currencies. I simply want to account -€500 less in "EUR Cash in Hand", and +£457.91 more in "Cash in Hand", as well as account for a €3.03 "bank service charge", going to its respective account in Wave... Ideally all in one journal transaction. See image below for what I was aiming for!
I'd respect if €3.03 needed to be accounted for in GBP, as it's an expense, and I should convert that. But the rest doesn't make sense to me.
I was in the process of changing from Quickbooks, as Wave is free to use and looks much cleaner and easier to use. But this was something relatively easy to do in Quickbooks, and I can't see that Wave has the functionality to do something that I thought would be a relatively commonplace transaction in commerce.
Please help! ... Maybe there is another, (possibly longer) way round doing it that my amateur mind doesn't know about. If there is, please break it down step by step for me, as I'm not familiarised with accounting at all
Sorry for length also haha!
Thanks in advance!