QuickBooks Training Post:

In today’s post, we want to take a look at working with a customer using a different currency. In other blog articles, we have explored the multicurrency option at a high level and setup a multicurrency customer.

We also created an invoice for that Euro customer, examining how that process affected our QuickBooks Online (QBO) reports.

Let’s carry on with that theme. What about accepting payment from that multicurrency customer? How is that different than a domestic transaction? What is it that QBO does differently when using Euros (as an example) instead of dollars?

What makes the multicurrency necessary is the fluctuation in exchange rates. It may take .28 to buy one Euro today. In thirty days, it may only take .17 to buy the same Euro.

It’s complicated. QBO will make sense of those complications for us.

One more point before we work with our multicurrency customer.

QBO is tracking the exchange rates between currencies. We don’t have to do that. We only need to use the multicurrency feature in QBO correctly. The software will take care of the rest.

This is our invoice for our multicurrency customer. This was created about a week ago.

Note that it is for 5250.00 Euros. QBO also gives us the amount in dollars, our home currency. That amount is 88.91.

Now, let’s receive the customer’s payment for this invoice.

We are receiving a payment of 5250.00 Euros to pay the invoice in full. QBO tells us the value in dollars as well.

Only now, the amount in dollars is 82.20. The exchange rate has changed that much in a week.

In this case it’s to our advantage. The invoice we created was valued at 5788.91 in dollars and is being paid at a value of 6082.20 in dollars.

Next time though, it might go the other way.

The final step as most of you know is to create the deposit transaction.

QBO will require that you deposit to a bank account whose currency has been specified as Euros. This is done in the account setup. If you try to mix currencies in a bank account, QBO will display an error message and refuse to save the transaction.

The second arrow in the above screenshot points to the field in which we specify the currency being used. In this case, that is Euros.

Our financial reports always show account balances in our home currency, remember? So, the balance sheet shows our Euro bank account with a balance of 82.20.

This leads us to one last problem.

We created an invoice a week ago and under the then current exchange rate, that invoice was worth 88.91.

So, our profit and loss would have shown income of 88.91.

How do we get 82.20 in the bank? What happened to the other 293.29?

The exchange rate difference is recorded to an account called Exchange Gain or Loss. It is an Other Expenses type of account. That’s why in this case, the balance shows as a negative number. For this transaction, the exchange didn’t result in an expense, it created a little additional income.

Hector Garcia, CPA
Certified Advanced QuickBooks ProAdvisor
12401 Orange Drive #136
Davie, FL 33330
954-414-1524
hector@garciacpa.com

The post Working With Multicurrency Customers in QuickBooks Online appeared first on QuickBooks Training & QuickBooks Consulting. Best rated in Miami & Broward.

Source: Hector\’s QuickBooks Blog

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