I'm trying to work out if we should use the multi-currency feature but remain unsure if it is worth us considering. The charity i am helping is US based with one part-time employee in the US. Programming is carried out in Uganda. Currently, one of the employees in Uganda submits a spreadsheet of all transactions in Ugandan Shillings on a monthly basis. Transfer payments are sent to Uganda from the US on a quarterly basis. I have never used the multi-currency setting in QB and I haven't found any examples online that mimic our scenario. Is there any reason to consider using it or are we better off simply converting the Ugandan transactions into USD (using the quarterly transfer exchange rate?) before importing into QB? Thanks!
Hello there @UVP,
As you mentioned, you've been using other currency in your QuickBooks Desktop account. However, you can use the multi-currency feature to make your work easier.
Visit this article link for the steps: Set up and use Multi-currency.
For more details about our product, you can check this link: QuickBooks Help.
If you need further assistance, just leave a message in the comment section. I'm always around here to help.
Thanks for the reply, i have switched on the multi-currency feature in my test company file and have encountered a few issues that perhaps I'm not thinking clearly about!
1. I am transferring funds from USD to UGX - I know both the $ amount that left my USD account and the shilling amount that arrives in the UGX account so I am attempting to add in the correct exchange rate to show the correct amounts in both accounts. However with a limitation on number of decimals that can be entered for the exchange rate the amount taken from the USD account is now slightly off. Any way to resolve this?
2. There is a similar issue with the UGX accounts payable account. As all of the UGX bills are paid from the UGX account there should be no foreign exchange loss or gain. I have the exact same exchange rate listed on the bill as on the bill payment but yet I've ended up with a small discrepancy in the A/P account. Is this because I'm paying multiple bills at the same time and it's generating some kind of rounding error? Is the only way to avoid this by paying each bill separately?
I appreciate the complete details you've provided, @UVP.
Let me share additional information so you'd be able to track your transactions properly.
First, you'd want to make sure that you have added your UGX bank account in QuickBooks. Here's how:
Once completed, you can use the transfer funds feature to transfer funds from the USD account to the clearing account you've created. Then, from the clearing account to the UGX account. Just make sure that the amounts match to get the exact value of funds.
On the other hand, you can assign a foreign currency to your vendor.
Also, make sure to use the Accounts Payable UGX when creating the bill.
Lastly, let's ensure to use the Ugandan Shillings account in paying the bill. By following the entire flow, there would be no foreign exchange loss or gain.
You can read through this article to learn more about how multi-currency works in QuickBooks: Set up and use Multicurrency.
Always feel free to leave your comments below if you have other questions about managing your multi-currency transactions. I'm always here to help.
Thanks but unfortunately that really doesn’t help. I already have a UGX bank account set up and do not see how adding a clearing account makes any difference as I’m still having to deal with the exchange rate limitations.
I transfer exactly USD11,800 from my USD account to the UGX account. I know that the UGX account received exactly 42,941,080 shillings. Because of how many decimal places I am limited to entering in the exchange rate box, I get a mismatch on the entry. Now it appears that I transferred USD 11799.96 instead of 11,800. Or alternatively I could show that $11800 left the USD account but the amount received in Shillings is slightly off. Either way i am unable to show the correct amounts in both accounts. Unless there is something I'm missing, it appears the only option is to use a journal entry to correct the balance.
With respect to the accounts payable, it is exactly the same issue. As I stated, the bills are all being entered in the UGX A/P and the UGX account is the only account being used to pay the bills. The vendors are all listed as UGX currency vendors. However, my UGX A/P account currently shows a difference of 7 cents on the balance sheet which makes no sense given that the exchange rates are identical on all incoming bills and outgoing payments.
Allow me to help you further and get this working for you. To correct the balance, you'll need to create a journal entry for this transaction. However, using this method needs the assistance of an accounting professional for the accounts you need to use. Also, your accountant can help and guide on which account to debit and credit.
To create a journal entry, here's how:
You can get more details about this process in these articles:
Feel free to drop me a line if you have any other QuickBooks concerns. I'll be sure to get back to you and help you whenever I can. Keep safe and have a good one.