Credit Card Accounting - Part 3

A Swiss company card buys a software licence from Berlin. The vendor invoices euros, the card statement shows francs, and the rate between the two was set by the card company on a day nobody chose. The card has quietly joined the list of parties who set your exchange rates. This closing part follows the card across the currency line — at the pace of the books, not of a trading desk.

The rate nobody quotes

When the receipt for EUR 100 arrives, the books cannot wait for the statement: the expense is converted at the official daily rate of its booking date and recorded — say at 0.9200, CHF 92.00. Weeks later, the card statement settles that purchase with CHF 92.40: the card company's own conversion, margin included, embedded in the amount. Nobody ever tells you the rate; you receive a pair of amounts. A faithful system stores exactly that — euro face value and franc settlement, side by side — and never invents a rate of its own:

That 0.40 is realised — not because any revaluation said so, but because francs actually left at the card company's rate. Two conversions met on one purchase — the books' official rate and the card company's — and only one of them was ever quoted. And if the card itself ran in a foreign currency, the bank's lump sum would add the same pair one layer up: a face value on the statement, francs on the bank line, the rate implicit between them.

Realised once, when the transaction closes

When does the 0.40 hit the income statement? In our implementation: once, at the moment receipt, card item and settlement finally balance and the transaction closes. While documents are still arriving — and while a human may still be re-matching them — nothing is realised; the small franc residual sits on a transit account, exactly as visible and exactly as provisional as the open transaction itself. At close, whatever residual remains is swept to the currency-result account in a single booking, dated to the last cash movement:

One transaction, one currency booking — however many partial payments, corrections and re-matches came before. That stability is the point: matching in pre-accounting is a living process, and a result that re-realised itself on every adjustment would spray gains and losses across the ledger. Realising once, at close, keeps the income statement as calm as the documents allow.

When the whole card runs in euros

So far the card was a franc card buying euros: every purchase settled in francs, and no open currency position survived the statement. The opposite case — a card account that itself runs in euros — turns the card balance into a foreign-currency liability, and the classical year-end rules apply unchanged: open balance, closing rate, revaluation. For most Swiss SMEs this stays theoretical, since company cards are overwhelmingly franc-denominated. But the machinery does not care: revaluation keys on an account's currency, not on its type (art. 958d para. 3 CO; under IFRS, monetary items are translated at the closing rate, IAS 21.8). A euro card balance, a euro loan and a euro bank account are the same animal on 31 December:

Booked under the imparity principle — an unrealised loss in full, an unrealised gain only on a short-term position (art. 958c para. 1 no. 5 and 960a para. 2 CO) — it lands on the same currency-result account as the realised one, and the next statement settles the card at whatever rate the bank then applies, at which point the story returns to the previous section. One honest wrinkle: a purchase still unmatched over the year-end realises its whole currency result in the year it finally closes. The transit accounts holding its residual are deliberately not revalued — the result is booked once, at close, rather than twice. The books trade a sliver of timing precision for never double-counting.

Two moments, one account

The card thus needs no currency machinery of its own — it inherits the two moments every foreign-currency position already has:

Which is the quiet result of the whole series: a credit card is not a new accounting problem. It is a liability account, fed by a statement, settled by a bank, now and then speaking someone else's currency — and a pre-accounting system replicates it with exactly the concepts it already had. An account for the debt, a ledger that can wait, and a currency result with two moments.

No single right shape

What the series does not hand you is one universal design, because the right shape depends on the client. When modern cards deliver their settlement data at once — itemised, almost in real time — the hard problem of Part 2 dissolves: the books learn how each receipt was paid the moment it arrives, and a dedicated card ledger per channel becomes the simpler, cleaner choice. When documents still turn up as a quarter-end stack that says nothing about how they were paid, the generalized ledger that waits for the money earns its complexity.

And when a mandate genuinely demands precise year-end currency exposure, one can split the books by currency on top of all this — but that accuracy compounds into machinery quickly, and rarely earns its keep beyond a few special clients. For most Swiss SMEs a franc card, realised at close and left out of the year-end revaluation, is the whole story. The craft is fitting the design to the client — not the client to the design.