If a downloaded transaction from the bank does not match a payment due to an FX translation difference, why does QB not try to identify this as an exchange difference?

I appreciate the effort you've made in adjusting the QuickBooks exchange rate to match the USD bank payment, KJ. QuickBooks uses specific criteria to ensure bank transactions match your records accurately.

It looks for an exact match on the amount, date, and payee. Even a difference as small as $0.01 prevents the system from automatically matching the transaction.

The mismatch occurs because the exchange rate changes between the time the invoice is created and when the payment is received. When you enter an entry in a foreign currency, QuickBooks locks in the exchange rate for that day to calculate its value in your home currency.

But when your client pays, the bank uses its exchange rate on the day the payment is processed. This rate is almost always different from the one on the invoice date.

It's also helpful to know that QuickBooks uses exchange rates from an external provider, IHS Markit, which updates the rates every few hours. This reason explains why the rate on the invoice date in QuickBooks doesn't always match the rate your bank uses when processing the payment.

To match an invoice, you need to use a bank account that uses the same currency as the payment. While QuickBooks doesn't automatically adjust for foreign currency payments, you can create a Dummy Bank account to handle payments from foreign bills.

Then, transfer the money from your foreign currency bank account into this Dummy Bank account. Also, ensure the Multicurrency feature is enabled in your settings.

Here's how to create the account:

1. Head to the Gear icon and select Chart of Accounts.
2. Click New, then enter Dummy Bank as the account name.
3. Choose Cash and Cash Equivalent or Bank as the Account Type.
4. Under Detail Type, select Cash on hand.
5. Set the account's currency to your home currency before saving.

After completing these steps, you can receive the USD payment by following these steps:

1. Click the +Create icon and select Receive Payment.
2. Set the Deposit To field to the Dummy Bank account.
3. Complete the necessary payment details.
4. You'll see the home currency amount displayed before saving the transaction.

Afterward, transfer the USD amount from the Dummy Bank account to your foreign currency bank account using the bank transfer feature.

For more detailed guidance, check out this reference: Receiving and making payment for a foreign invoice/bill with a foreign currency. The steps apply to all regions, even though this article is for Singapore.

This thread will remain open if you have further queries. We're always here to help.

Thanks for the feedback. However, QuickBooks's approach is much more complex than it should be. Creating a dummy bank account and using it to match bank FX transactions is “overkill.” A more straightforward method (although not ideal) is to delete the downloaded bank transaction and make a reconciliation adjustment to offset the cash differences. QuickBooks needs to find a software solution to this issue that does NOT add an extra step, like a dummy bank account or reconciliation adjustment, to this process.

I was able to fix this the following way:

1. Find the invoice, and select "Receive payment"
2. Ensure the "Deposit To" account is the bank account you want. 
3. Check ALL the outstanding transactions listed that were paid by the foreign currency wire .
4. Find the actual exchange rate by dividing the amount received by the foreign currency amount (e.g. 917 Euros received for 800 Dollars then 917/800 = 1.14625) and enter that rate into the exchange rate box at the top of the receive payment box.
5. Agree to the popup box asking if you want to change the rate.
6. Select "Record and close"
7. Go back to your "Bank transactions" page and it should now show up as a match to the "Pending" amount you need to post.

I was able to fix this the following way:

1. Find the invoice, and select "Receive payment"
2. Ensure the "Deposit To" account is the bank account you want. 
3. Check ALL the outstanding transactions listed that were paid by the foreign currency wire .
4. Find the actual exchange rate by dividing the amount received by the foreign currency amount (e.g. 917 Euros received for 800 Dollars then 917/800 = 1.14625) and enter that rate into the exchange rate box at the top of the receive payment box.
5. Agree to the popup box asking if you want to change the rate.
6. Select "Record and close"
7. Go back to your "Bank transactions" page and it should now show up as a match to the "Pending" amount you need to post.