Reply to: Best business account to be paid in euros

[jamesbrown]

Cater Allen do a business Euro account with IBAN number and debit card, no fees for receiving funds and it's FSCS deposit protected, not sure you get FSCS protection with Wise. Barclays also do a Euro account.

You also pay through the nose on the exchange rate, several %. Sure, no FSCS protection with Wise, but you don't need to keep it there, it's purely for fx.

[tl97]

Cater Allen do a business Euro account with IBAN number and debit card, no fees for receiving funds and it's FSCS deposit protected, not sure you get FSCS protection with Wise. Barclays also do a Euro account.

[jamesbrown]

Yes, even permanently (I still use one), and I would always recommend consulting with an accountant, in general, but I've had very mixed experience w/r to their understanding of multicurrency transactions and other things that are probably edge cases for a majority of contractors.

[Whitelime]

Fwiw, I trust FA much more than I'd trust an average accountant when it comes to multicurrency transactions because I've seen several of them make a complete pigs ear of it in the past. In FA (or similar), it's seamless and FA uses the XE.com rates (along with the invoice date and the conversion date to determine unrealized and realized gains/losses).

I really like FA too, but I think an accountant is very useful for the first few years as a contractor. Seems like RajaStyles is new to contracting and trying to DIY everything.

[RajaStyle]

Yes wise are saying to get account details to receive money then you need to pay a one off £16 fee otherwise you just get a free account which you can send money after loading with money.

[jamesbrown]

The £16 is news to me too, but they've just revamped. They now want trading addresses too, not just registered office.

[jamesbrown]

Fwiw, I trust FA much more than I'd trust an average accountant when it comes to multicurrency transactions because I've seen several of them make a complete pigs ear of it in the past. In FA (or similar), it's seamless and FA uses the XE.com rates (along with the invoice date and the conversion date to determine unrealized and realized gains/losses).

[Whitelime]

Thanks Whitelime will be organising an accountant.

Wise just has a one off fee of £16 for the account right ?

I used their calculator (see attachment) which said their fee to transfer 10000 Euros would be 41.33 which would be the bank charges/fee that you mentioned but still not sure I understand the loss on exchange.

In the attachment it just shows the rate as 0.845250, if I don't have FreeAgent is there somewhere I should be checking the rate (where would that be) ? and then getting the difference between that and the 0.845250 that wise quoted for example which might be 0.005 giving me a loss of exchange of 50 (on 10000)? Some accountants use their own internal system and not cloud software hence asking.

When I opened my Wise business account, there was no fee. The £16 must be new.

When you first create the EUR invoice, you should be recording the GBP equivalent. There's several different ways you can get the FX rate to use for this, but the most important thing is that you always use the same way. If your accounting software doesn't manage this, check XE.com on the day after you issue the EUR invoice. So if you issued the EUR invoice today, tomorrow you'd check the historical rate on XE.com for today and use that.


To go through your example;

- You're converting EUR10000 and getting GBP8,417.57 + GBP(41.33 * 0.84525) = GBP8452.50

- To balance the fees being included in the above amount, you need a balancing entry for (GBP34.93) which is allocated as bank fees.

- The gain/loss on FX is the difference between the GBP equivalent amount of your invoice on the issue date, and GBP8452.50.


I really think you should get an accountant, if you need to pay one anyway for year-end submissions, it'll cost the same as paying 12 * monthly to have one all year.

[RajaStyle]

if anyone wants to send me a wise referral link please free to do so.

[RajaStyle]

- Invoice is for EUR10000
- GBP equivalent (as you're a UK company and you record everything in GBP) is GBP8000.
- After sending EUR10000 from your Wise EUR account, you receive GBP7920 in your Starling GBP account.
- Wise tell you they've deducted a GBP30 fee already (the fee will be in EUR, but you know the EUR amount and FX rate used).

GBP7920 + GBP30 + GBP50 = GBP8000 would be allocated to the invoice.

(GBP30) would be allocated to bank charges/fees.

(GBP50) would be allocated to loss on exchange.

How you go about creating these additional entries will vary depending on the software you're using. In FreeAgent, for example, you'd modify the GBP7920 to GBP7950 and an entry of (GBP30) would automatically be created to balance everything. You'd then allocate the (GBP30) to bank fees and GBP7950 to the invoice. FreeAgent knows the exchange rate on the day the EUR invoice was created and would allocate the (GBP50) to loss on exchange automatically.

Thanks Whitelime will be organising an accountant.

Wise just has a one off fee of £16 for the account right ?

I used their calculator (see attachment) which said their fee to transfer 10000 Euros would be 41.33 which would be the bank charges/fee that you mentioned but still not sure I understand the loss on exchange.

In the attachment it just shows the rate as 0.845250, if I don't have FreeAgent is there somewhere I should be checking the rate (where would that be) ? and then getting the difference between that and the 0.845250 that wise quoted for example which might be 0.005 giving me a loss of exchange of 50 (on 10000)? Some accountants use their own internal system and not cloud software hence asking.

[jamesbrown]

Still can't quite picture how it all works in my head without FA knowing the FX rate used by Wise... maybe I'll set it all up and see for myself.

At the moment, I'm just sending from Wise EUR (not connected to FA) directly to UK GBP (connected to FA) and the adding the fee amount in GBP (using the Wise FX rate) to the GBP transaction showing in FA. FA then creates the corresponding debit entry to be assigned to bank fees and the FX gain/loss is managed automatically by allocating the GBP credit to the EUR invoice.

It knows because there is a USD payment (without the USD fee) between the USD Wise account and the GBP Wise account. That is the currency conversion with the implied Wise interbank rate. Once each end of that transaction is correlated between accounts, the realized gain/loss is clear. Substitute USD for EUR, same principle.

[Whitelime]

No, the bank fee always shows as a separate transaction for me. For example, if I have a USD invoice, my Wise USD account will show an incoming transaction when the invoice is paid, then an outgoing transaction for the USD-to-GBP conversion fee, plus a separate outgoing transaction for the USD transferred to my Wise GBP account minus the USD fee. In my Wise GBP account, the outgoing (USD) and incoming (GBP) amounts are then correlated and this correlation forms the basis for the realized gain or loss relative to the invoice date. It's all pretty seamless. Again, I always transfer internally between Wise accounts (and represent that in FA) before transferring to an external GBP account.

Still can't quite picture how it all works in my head without FA knowing the FX rate used by Wise... maybe I'll set it all up and see for myself.

At the moment, I'm just sending from Wise EUR (not connected to FA) directly to UK GBP (connected to FA) and the adding the fee amount in GBP (using the Wise FX rate) to the GBP transaction showing in FA. FA then creates the corresponding debit entry to be assigned to bank fees and the FX gain/loss is managed automatically by allocating the GBP credit to the EUR invoice.

[jamesbrown]

Yup, as eek says, some banks use a push model (e.g., Starling), but FA will otherwise poll/pull.

[eek]

The fee for converting between my Wise Euro and Wise GBP account is shown as a seperate transaction. I just then tag it in FreeAgent as a banking charge. Likewise the fee for txing out to another bank account.

Free agent works well with Wise and mostly I don't need to do much.

One thing to note about the feed for Wise, is it only picks up transactions about once per day, compared to mettle which posts transactions immediately.

Not surprising - Natwest / Mettle have a send on each transaction approach for freeagent (not surprising as they own it). For all other banks Freeagent runs an overnight polling process to request recent transactions from the linked bank accounts

[Bodger]

I saw the feed was available, but my Wise EUR statement doesn't show the Wise fees being deducted. Are you just allocating the entire difference to FX gain/loss and ignoring the bank fees, or am I missing a trick?

The fee for converting between my Wise Euro and Wise GBP account is shown as a seperate transaction. I just then tag it in FreeAgent as a banking charge. Likewise the fee for txing out to another bank account.

Free agent works well with Wise and mostly I don't need to do much.

One thing to note about the feed for Wise, is it only picks up transactions about once per day, compared to mettle which posts transactions immediately.