How to account for an invoice in Euro and payment in US Dollars?

Hi there, CityTim.

Welcome to the QuickBooks Community. I'll share details on how currency entries work in QuickBooks Desktop. Then, ensure you'll be able to record the payment accurately.

There's a Multicurrency feature in QuickBooks Desktop where you can keep track of transactions in foreign currency. This will allow you to assign a specific currency type. To start with, you'll have to turn on this feature in the Preferences. Please keep in mind that you can no longer turn off Multicurrency once on. You'll have to make sure that you backed up your QuickBooks company file before proceeding. Then, manually exchange rates for Euro to US Dollar to use in your transactions.

Here's how to turn it on:

1. Go to the Edit menu and select Preferences.
2. Choose Multiple Currencies at the left panel.
3. Go to the Company Preferences tab and select Yes, I use more than one currency.
4. From the drop-down, choose your home currency.

Once done, please follow the steps below on how you can enter exchange rates in QuickBooks.

1. Go to the Lists menu and choose Currency List.
2. Double-click a currency.
3. In the Edit Currency window, update the currency exchange rate for specific date/s.

After that, I recommend setting up the Customer profile into a Euro currency.

Here's how:

1. Go to the Customers menu and choose Customer Center. 
2. From the Customer Center, select the New Customer:job. Then, choose New Customer.
3. Assign a Customer Name and Currency.
4. Click OK.

Once done, you can now create an invoice and you'll see that when you choose the Euro customer, it will automatically exchange the rate to the US dollar since you've set up a setting for this. Then, the details in the said entry will automatically generate when you receive a payment, and converting X Euro into $Y in "Undeposited Funds" isn't necessary. I attached screenshots for visual references.

Lastly, you may refer to this article to see different details to help you organize your cash flow, and track sales, receivables, and profitability more accurately: Get started with customer transaction workflows in QuickBooks Desktop.

Please let me know in the comments if you have further questions or concerns about Multicurrency. I'll be here every step of the way. Take care and have a great day!

Thank you for the detailed advice!  My only question is whether turning on Multicurrency Support will add a burden with my $US clients. There must be some reason that every mention of Multicurrency mode warns that is is an irreversible choice and that one should be sure that it is “right for you”.

Great question, CityTim!

You're right that once the Multicurrency feature is turned on, you can't turn it off. It's because we can no longer change the multicurrency settings as they permanently affect your company file's names, accounts, and balances. Thus, if you need to revert to your single currency company file, I recommend doing a backup, then, restore the backup you made before you turned the feature on.

Moreover, I recommend visiting this website: Multi-currency Overview. This link provides you with steps on how to add foreign-currency customers, vendors, and accounts. Also, it contains more information about updating your exchange rates and creating foreign-currency transactions. 

Please let me know if there’s anything else you need. I’ll be here to help. Enjoy your day!