Invoicing in a Foreign Currency

If you trade with companies in other countries, you can process foreign currency transactions. You can easily record invoices, credit notes, payments, and receipts in different currencies. You can choose to use live exchange rates from the Federal Reserve System (FRS), which update daily so you’re always using the most up to date rate. You can also track any losses or gains as a result of changes in the rate.

Using multiple currencies (9:26)

To set up foreign currency transactions

Before you start entering transactions using different currencies, you need to enable foreign currency transactions and enter the correct currency in your contact records.

To enable foreign currency transactions

  • 1. On the toolbar, click Settings .
  • 2. Under Financial Settings, click Foreign Currencies.
  • 3. Select the option Enable Foreign Currency Transactions.
  • 4. Select the option Use Live Exchange Rates to automatically use the most up to date exchange rates from the Federal Reserve System (FRS).

If you choose not to use live exchange rates, you must manually enter and maintain the rates for the relevant currency. You can do this here, or you can enter the rate when posting individual transactions.

Three currencies are automatically created for you: US Dollar (USD), Canadian Dollar (CAD), and Mexican Nuevo Peso (MXN). You can’t delete your base currency, or a currency that is in use. If you need to delete any currencies that are not in use, click the delete button .

  • 5. Check or enter the following information:
Bank Charges Ledger Account This is the account used for any bank charges you might incur.

For example, to keep a record of how much foreign transactions cost you in bank charges, you may want to use a separate account to the one you use for normal bank charges. If necessary, you can create a new code in your Chart of Accounts.
Exchange Rate Gains and Losses Ledger Account* If the exchange rate changes between creating an invoice and receiving or making a payment, the difference posts to this account. This helps you keep track of how much you gain or lose through changes in the rates.
  • 6. To add a new currency, select it from the drop-down on the next available line.

The rate automatically appears. If you chose to use live exchange rates, the latest rates from the FRS appear. If you chose not to use live exchange rates, manually enter the rate.

  • 7. Click Save.

You’ve successfully enabled foreign currency transactions and chosen your currencies. You’re now ready to check the currency settings in your customer and vendor records.

If you’ve already entered transactions for an existing contact, you can’t change the currency. The menu is disabled. Instead, you need to create another contact record for the customer and choose the currency you want to use.

To process foreign currency transactions

Once you’ve set up Accounting for foreign currency transactions, you’ll notice some differences when recording transactions. Your invoices, credit notes, quotes, payments, and receipts amounts now appear in the currency for that contact. You can see the exchange rate used and what the value of the transaction is in your base currency. You can also record any currency charges incurred. When recording bank transactions, the value on the bank activity always appears in your base currency. To view details of the transaction, including the foreign amount and exchange rate used, from within the relevant bank account, click the payment or receipt.

Journals, other payments, and other receipts are always posted in base currency and you can’t enter quick entries using foreign currency. If you need to enter an invoice or credit note, please see the section below.

Invoices, credit notes, and quotes

When entering invoices, credit notes, and quotes, you should create them as normal. However, you should also consider the following:

  • The default exchange rate appears in the top section of the invoice or credit note. If you chose to use live exchange rates, this is the most up to date rate from the FRS. If you don’t use live exchange rates, this is the default exchange rate you entered in Foreign Currency Settings. In either case, you can overwrite the exchange rate if required.
  • Item lines shown on the invoice, credit note, or quote appear in the currency for the chosen contact.
  • If you have products with a default price, or services with default rates, the price or rate is converted based on the contact’s currency and the current exchange rate.
  • If you enter values for the invoice, credit note, or quote, then change the contact to one with a different currency, you’re prompted to either convert the values or leave them as they are. If you convert them, the values update based on the new contact’s currency.
  • If you convert a quote, draft invoice, or credit note, the original exchange rate applies. If the exchange rate has changed since you created the quote or draft, enter the correct rate in the Exchange Rate box.

Invoice receipts and payments

There is additional information you need to check when recording a receipt or payment from within an invoice using foreign currency.

The steps below explain how to record a payment from a customer. If you want to record a payment to a vendor, replace sales with expenses and receipt with payment.

  • 1. From the Sales menu, click Sales Invoices.
  • 2. Click the invoice and then Record Payment.
  • 3. Check or enter the following information:
Amount Received* Enter the total amount paid in the foreign currency. The amount in your base currency appears under Amount Received.
Discount Given Indicate any discount you gave the customer.
Exchange Rate* If you use live exchange rates, this is the current rate from the FRS.
Paid into Bank Account Choose the bank account.
Date Received* Enter the date of the receipt.
Your Reference (Optional) Enter a reference for the receipt.
Currency Charges Enter any charges you incurred from your bank for this receipt. Currency charges always appear in your base rate.
  • 4. Click Save.

Customer receipts and vendor payments

You can enter customer receipts and vendor payments to record a payment for multiple invoices at the same time or to record a payment on account in a foreign currency.

The steps below explain how to record a payment from a customer. If you want to record a payment to a vendor, replace receipt with payment and customer with vendor.

  • 1. Click Banking.
  • 2. Click the bank account.
  • 3. From the New Entry menu, click Sale/Receipt.
  • 4. Click the Customer Receipt tab.
  • 5. Check or enter the following information:
Customer Choose the customer from the drop-down list.
Paid into Bank Account Verify the correct bank account appears. If you need to change this, choose the correct account from the drop-down list.
Date Received* Enter the date the payment was received.
Your Reference (Optional) If necessary, enter a reference for this receipt.
Amount Received* Enter the total amount the customer has paid in their currency.
Exchange Rate If you use live exchange rates, this is the current rate from the FRS. If necessary, you can overwrite this.
Currency Charges Enter any charges you incurred from your bank for this receipt. Currency charges always appear in your base rate.

Customer and vendor refunds

You can use the customer or vendor refund option to refund credit notes or payments on account in a foreign currency.

The steps below explain how to record a customer refund. If you want to record a vendor refund, replace payment with receipt and customer with vendor.

  • 1. Click Banking.
  • 2. Click the bank account.
  • 3. From the New Entry menu, click Expense/Payment.
  • 4. Click Customer Refund.
  • 5. Check or enter the following information:
Customer Choose the customer from the drop-down list.
Paid from Bank Account Verify the correct bank account appears. If you need to change this, choose the correct account from the drop-down list.
Date Refunded* Enter the date the refund was made.
Your Reference (Optional) If necessary, enter a reference for this refund.
Amount Refunded* Enter the total amount you’ve refunded in the customer’s currency.
Exchange Rate If you use live exchange rates, this is the current rate from the FRS. If necessary, you can overwrite this.
Currency Charges Enter any charges you incurred from your bank for this refund. Currency charges always appear in your base rate.

To check your exchange rate gains and losses

If the exchange rate changes between posting an invoice and payment or credit note and refund, the difference in the rate is posted to the Exchange rate gain/(loss) account. This value appears as an overhead on your Profit and Loss Report.

To view the transactions that make up this value, click Exchange Rate gain/(loss). This shows the General Ledger Report and from here you can view a summary of each transaction, or click the transaction to view details.