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Senior Explorer **

Multicurrency Exchange Rate

Hi,

 

Just a quick question hopefully....

 

I have just set up multicurrency, as I might be starting a new contract in Belgium shortly and I believe that my invoices will be billed and paid in Euros.

 

Now, each time I raise a bill, the euros side will be fine, as I will bill in Euros and will be paid that amount of Euros, but the conversion from my business account, I suspect will differ each time, since the exchange rate will fluctuate.

 

My question is, if I set the exchange rate in the settings manually, will this affect past invoices?  By that, I mean would it go back and amend the exchange rate used in all previous invoices?  Or will this only impact new invoices/payments received?

 

Obviously, the aim is to end up where the converted (exchanged) euro payment in to Pounds matches the Pounds amount on my invoice so that everything matches up nicely :-)

 

Thanks

 

Andrew

Solved
Best answer 02-15-2019

Accepted Solutions
QuickBooks Team

Re: Multicurrency Exchange Rate

Hello Andrew,

 

Welcome back to the Community - thank you for your question!

 

If you alter the exchange rate within the settings, it will not affect any previous invoices/payments, only those going forward.

 

Please let us know if you have any further questions.

 

Thank you,

 

Talia

4 REPLIES 4
QuickBooks Team

Re: Multicurrency Exchange Rate

Hello Andrew,

 

Welcome back to the Community - thank you for your question!

 

If you alter the exchange rate within the settings, it will not affect any previous invoices/payments, only those going forward.

 

Please let us know if you have any further questions.

 

Thank you,

 

Talia

Senior Explorer **

Re: Multicurrency Exchange Rate

Thank you Talia. Perfect!

Senior Explorer **

Re: Multicurrency Exchange Rate

Hi @TaliaI 

 

Sorry to kind of resurrect this, but I've found out a little more on the process of my billing now and I am still a bit unsure how best to handle this...

 

  1. I will be billing a UK Agency, BUT I need to bill them in Euros because their client who I will be contracting for is based in Belgium and the contract rate is Euros
  2. They will pay me the Euro amount
  3. They have suggested that I set up a Euro Bank Account (which I am in the process of and have a meeting with my bank about it)
  4. I have configured the multi currency option so far, although I haven't yet set up any customer or transactions involving this currency, as I am still awaiting to find out if I have the contract!
  5. The plan will be to use the Euro Account to receive payment of my invoices and also for paying expenses that will directly involve expenses in Euros, such as accommodation etc.  I also plan to transfer money from this account over to my main (original) UK account since this is where the majority of my costs and expenses are funded from my income.  I'm not sure yet, and I am checking with my Accountant / HMRC, but I might also claim the HMRCs fixed expense allowance for Belgium too in this account/currency...depending on the advice I get back.

So, from further reading of the FAQs I have spotted that I can add in an additional account (as an account can only have 1 currency) and I have noticed in the Chart of Accounts that all of the accounts, including my bank account lists GBP (as expected).

 

But what I would like to know is:

 

  1. Do I have to create an additional expense account (such as Travel Expenses) so that I have 2 accounts, one for GBP and one for EU...in addition to the actual bank account?
  2. How would this affect reports such as the Profit & Loss?  I can't picture at the moment how that would include both.  Would it list both sets of amounts and how would it decide on total profit etc?  Or would it convert to GBP first for the purposes of this report.

I am just trying to learn as much as possible on the affects of this and how I should handle things like the multiple bank accounts, different expense categories (Chart of Accounts) and reporting for people like the Tax Man :-)

 

As I have said, I have seen some FAQ docs which I am working through but haven't spotted anything (yet) that answers the above, and would therefore appreciate any help that you, or anyone else that may have experience in dealing in multiple currencies could offer me with this.

 

Many thanks

 

Andrew

QuickBooks Team

Re: Multicurrency Exchange Rate

Hello again, @pezza.


Thanks for sharing such detailed information. It gives me an overview on how to help you handle your transactions in QuickBooks.

 

Based on the information provided, the Multi-currency feature will help you manage them. Just a heads up, this feature is only available in the Essentials and Plus version.

 

If that’s your current subscription, let me walk you through the process of activating it.

 

Here’s how:

 

  1. Go to the Gear icon at the top, then select Account and Settings.
  2. Choose Advanced on the left panel.
  3. Click on the Pencil icon for Currency, then select Home Currency.
  4. Mark the box for Multi-currency.
  5. Click on Save and Done.

Since you’ll be accepting Euro and Pounds, make sure to create these customers and banks in QBO. This will help you efficiently track transactions for each currency.

 

To add customers:

 

  1. Go to Sales on the left panel, then choose Customers.
  2. Click on the New customer button.
  3. On the Customer information window, enter the information for your UK agency/ EU client.
  4. Click on Save.

To add the foreign currency accounts:

 

  1. Go to the Gear icon at the top, then choose Chart of Accounts.
  2. Click on New in the upper-right hand.
  3. Choose the correct Account and Detail Types.
  4. Enter the account’s name in the Name field.
  5. Under Currency, click on the drop-down and choose GBP British Pound Sterling/EUR Euro.
  6. Click on Save and close.

After setting them up, you can now create invoices and accept payments in Euro. Once done, transfer the funds from your EU account to the GBP bank.

 

In regard to your other question, you don’t have to create another expense account for each currency because the amounts recorded in QBO are based on the home currency, and it goes the same way on your reports. However, you can run the Balance Sheet report to check the data for each currency.

 

The information I provided should point you in the right direction.

 

If you have additional questions about QBO, reach out to me by posting a comment below. I'm here to assist you further.