Foreign Exchange Losses


I have a question I was hoping someone could help me with.

The UK company I work for deals mainly in dollars and Euro's but only have a Sterling account. We set the exchange rates on our accounting system (SAP) each day using the rate shown on When we receive funds our bank obviously converts using a lower rate and this posts into our 'realised foreign exchange losses' account on the P&L.

I had been wondering if I can set the rate on SAP lower than the advertised rate to take account of the fact that our bank will probably use say Euro 1.35 rather than the central bank rate of 1.40? Or would this be poor accounting practice?

Any other advice on minimising foreign exchange losses would be appreciated, bearing in mind we don't have the funds to buy block amount of currency at the moment.


  • Neillaw
    Neillaw New Member RossendaleMAAT, AAT Licensed Accountant Posts: 283 Regular contributor ⭐ 😼 ⭐
    You would need to be consistent with treatment, we only change our SAP system once a month with the Inland Revenue rates.

    If your receiving payments in and out of the different currencies then it may be worth setting up different currency accounts, this would reduce your exposure to market movements. You may also find this reduces your exchange as it doesn't have to be converted from sterling to the relevant currency.
    James222Diddy Mau
  • James222
    James222 Registered Posts: 2
    Thanks Neillaw. I didn't know about the Inland Revenue monthly rates. I have just found them on their website, that is really helpful
  • Diddy Mau
    Diddy Mau Well-Known Registered Posts: 238 🎆 🐘 🎆
    Going to agree with Neil on this.
    Get two more bank accounts set up, one Euro and one Dollar. Have them pay into these accounts.
    You will only suffer exchange differences when you exchange back to Sterling.
    I use for Month end revaluation of foreign currency. But yes you need to be constant, if asked where these rates are from you can show physical proof. Especially helpful when the rates change in your favour
Privacy Policy