Exchange difference

Foreign-currency invoicing puts two clocks on the same document: the amount in currency, which never changes, and its value in Turkish lira, which changes with every day that passes. The gap opens at two moments, and they behave differently. At settlement the difference is realised, because the lira that entered or left the bank account is a fact. At period-end revaluation it is unrealised: no money moves, and the still-open currency lines are simply restated at the closing rate. Which rate applies is a question of its own. Turkish practice takes the official foreign-exchange buying rate published daily by the central bank as the reference, but one party may convert at the invoice date and the other at the posting date, and a contract may fix a rate of its own. The rate the bank actually gave on the day is usually different from all of them.

The consequence for reconciliation is that foreign-currency accounts have to be matched on the currency amount rather than the lira amount. If the lines agree in dollars, the invoice and the payment are linked and there is no matching problem; the lira divergence is a separate, named item. Naming it matters more than it sounds, because the two kinds of difference call for different answers. A realised difference is settled and closed. An unrealised one will move again at the next reporting date and be restated, so it is not something a counterparty can be asked to pay. A statement that adds them together, or that folds either of them into the open balance, cannot be discussed line by line with anybody. iFinances runs cross-currency matching on the currency amount at the official central-bank rate, labels the lira deviation as an exchange difference, and keeps it apart from a genuine matching gap, so a period-end conversation separates rate movement from real exposure.

Three things are commonly misread. A lira mismatch is taken as evidence that the account is a mess, when lines agreeing in currency terms are already reconciled. An exchange difference is confused with matching tolerance: a tolerance exists to absorb rounding of a few cents, while an exchange difference is a real amount, sometimes a very large one, that has to be recognised rather than waved through. And the exchange-difference invoice is forgotten. In Turkiye a separate invoice is commonly raised for the rate movement on a settled foreign-currency item; once issued it sits in the trade account as its own document, and if the counterparty has not booked it yet, that invoice becomes the next reconciliation difference. Partial settlement multiplies the effect, because each receipt converts at the rate of its own day, so one invoice can end up carrying several small differences instead of a single one.