Forward contracts

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Forward contracts

We are a NZ based export company and have recently secured 5*forward contracts with staggered due dates for cash flow purposes. How do we account for them in the Multi Currency module of MYOB given they do not match the sales flow? I'd be grateful to hear from anyone who deals with this. Many thanks.

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Ultimate Partner
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Re: Forward contracts

Hi @Wilhelmina1 , please explain further, are you talking about forward exchange contracts? 


Regards, Mike (mike@datawise.co.nz)
DataWise Limited (www.datawise.co.nz), developers of:
DataWise Report Writer - Custom Reporting from MYOB programs
(Including AccountRight Classic/Live, and exo Payroll)

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Re: Forward contracts

HI Mike

Yes I am, forward exchange contracts.

Looking forward to hearing about it.

thanks

Willy

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Re: Forward contracts

Hi @Wilhelmina1 , so perhaps you have taken out forward exchange contracts maturing at various dates for the sale of various foreign currency amounts, to allow you to obtain NZD funds for invoices from overseas customers at known rates, thus protecting your gross margins. (I note you mentioned you are an exporter).

 

Really, there are no additional entries to be made in your AccountRight file, beyond the normal banking entries. However, you will probably need records kept in a spreadsheet to manage your FEX contracts, for example if you take up parts of the contract over a period of time and you need to know how much is left on each contract.

 

The funds used under each contract will determine the exchange rate that you apply when receipting sales invoices in AccountRight. Your contracts may mature before you receive the funds, in which case you would either extend the contract (at a new exchange rate), or allow the contracts to mature and use  existing foreign funds to purchase NZD.

 

Do you have any particular questions? I hope my answer is helpful.


Regards, Mike (mike@datawise.co.nz)
DataWise Limited (www.datawise.co.nz), developers of:
DataWise Report Writer - Custom Reporting from MYOB programs
(Including AccountRight Classic/Live, and exo Payroll)

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Re: Forward contracts

HI Mike.

thanks for that answer. It helps a bit but we actually brought the cover to lock in rates for the transfers we make from our AU$ account when we need it for cashflow purposes. Maybe I am misinterpreting the cover as there is an obvioius mismatch between when we raise the invoice for a sale vs. when we transfer funds months later.  We bill in AU$s and get paid in AU$s. These funds sit in the AU$ account until cashflow needs dictates we to transfer some  EG , our situation is like per the grid below:

  Oct-19Nov-19Dec-19Jan-19Feb-19Mar-19Apr-19
 Sales $        250,000   $        250,000   $        250,000
 Debtor pays  $        100,000 $        100,000 $          50,000 $        100,000 $        100,000 $          50,000
         
 Trsf funds   $        150,000   $        200,000 
 FX contract   $        150,000   $        200,000 
         

 

Previously we held a rate for the month for sales and then restated the remaining balance in the AU$ account at spot at month end. Which rate should we use now for the Sales and the transfers and the month end restatement?

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Re: Forward contracts

Hi @Wilhelmina1 

 

I would recommend consulting with an accountant to ensure that you are using a process that meets your requirements and has the appropriate rates.

 

From an MYOB Support point of view, the rate of a transaction can be changed by selecting the rate next to the currency and adding in the desired rate. Our Help Article: Changing a transaction's exchange rate outlines that process.

Kind regards,
Steven

MYOB Community Support

Online Help| Forum Search| my.MYOB| Download Page

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Re: Forward contracts

Thank you for that. I have. Regards

Willy

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