If you issue an invoice in a currency different from your company’s base currency, the amount due may change based on the exchange rate at the time of payment compared to the rate on the invoice date
This variation called an exchange gain or loss and it arises when the exchange rate used at the time of invoicing differs from the rate in effect at the time of payment.
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Traditional accounting systems often require manual journal entries to capture these differences and ensure accurate financial reports but Wafeq handles this automatically.
As soon as you record the payment, the system calculates the gain or loss and posts it to the Exchange Gain or Loss account.
In this guide, we walk through a practical example:
We’ll issue an invoice in Egyptian Pounds (EGP), while the base currency of the company is Saudi Riyals (SAR).
We’ll then record the payment around 20 days later, at which point the exchange rate has changed, resulting in an exchange difference that Wafeq automatically recognizes in the journal entry.
Let’s follow the steps, from creating the invoice to posting the payment.
Issuing an invoice in a foreign currency
To issue the invoice, go to “Sales” from the main menu, select “Sales Invoices”, then click on the “Create” button.
Select the relevant customer, and in the “Currency” field, choose "EGP - ج.م".
Enter the invoice details , then click “Save.”
Once saved, the invoice amount will automatically be converted to Saudi Riyals (SAR) based on the exchange rate on the invoice date.
Recording a payment in the company’s base currency (SAR):
After approximately 20 days—during which the exchange rate have changed—go to “Customer payments” from the main menu, then click on “Record payment”
In the "Customer" field, select the same customer the invoice was issued to.
Under "Paid through", choose the account where the payment will be recorded.
Enter the "amount received" in SAR, along with the payment "date" and an optional "description", if applicable.
Select the payment type as "Invoices Payment".
Then, click on the "Add unpaid invoices" button.
Select the invoice we previously created in EGP, then click on the "Add" button.
Make sure the paid amount fully covers the invoice and the remaining balance is zero.
You can then download a PDF copy of the payment by clicking on the "Download receipt PDF" button, or save the transaction by clicking "Save".
Viewing the exchange gain or loss
Go to "Sales" from the main menu, then click on "Sales Invoices".
Make sure you're in "Sheet" view, and click on the invoice you’ve already recorded a payment for.
You'll find the Payments section.
Click on the book icon to view the journal entry generated by the payment.
The journal entry will automatically include a line showing the exchange gain or loss resulting from the difference in exchange rates between the invoice date and the payment date.
In our example, an exchange gain of SAR 1,674.67 was recorded.
When the invoice was created, Wafeq recorded the amount in EGP and calculated its equivalent in SAR based on the exchange rate on the invoice date, which in our case was:
1 EGP = 0.07409 SAR
After some days, the company received the payment from the client. On that payment date, the exchange rate had changed to:
1 EGP = 0.07576 SAR
Which means:
The invoice amount was 1,000,000 EGP
At the time of invoicing, that amount was equal to 74,091.78 SAR
At the time of payment, the same amount was equal to 75,766.45 SAR
The difference = 1,674.67 SAR, which is recognized as an Exchange Gain, since it resulted in an extra revenue for the company.
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