Holding Account

You can set up a holding account to track this workflow, but it must be in USD, not CAD.

In QuickBooks Desktop, you can't pay a USD bill from a CAD bank account because the software requires the paying account's currency to match the bill's currency. Setting up the holding account in USD also locks in the exact exchange rate you paid when converting your CAD.

Before creating the USD account, you'll need to enable the Multicurrency feature, which allows you to create accounts in different currencies. Please note that this change is permanent and cannot be reversed, so it’s important to back up your company file beforehand.

To create a USD account, here's how:

1. Navigate to Lists, then select Chart of Accounts.
2. Click the Account dropdown menu at the bottom and pick New.
3. Choose Bank as the account type and hit Continue.
4. Enter the required details, and from the Currency dropdown menu, select US Dollar.
5. Click Save & Close.

After that, if you haven't recorded the purchase yet, you'll need to create a bill indicating what you owe the provider for the foreign currency. Then, transfer the funds from your CAD account to your USD account to cover the bill:

1. Go to Banking, then Transfer Funds.
2. Set the Transfer funds from your CAD account to your new USD account.
3. Enter the CAD amount you're converting.
4. Click Save & Close.

Once the funds are deposited in the USD account, you can now pay the bill using that balance through the Vendors menu, since the currencies finally match.

If anything doesn't look right once you've set it up, or if you run into questions along the way, feel free to leave a reply below.

Thanks a lot.

When the bill is entered in USD funds will the costing show in CAD funds for my item cost?