If you have customers in another country you may want to bill them in their own currency.
You can also hold the funds in that currency if you open another bank account. By doing this you can reduce your exposure to currency fluctuations, and exchange the funds when the exchange rate is favourable. Or simply use the funds to pay expenses you incur in the other currency, avoiding extra fees.
In this week’s video blog I show you how to set up a customer in another currency, and also a bank account in QuickBooks Online.
At the end of the video you will be able to see how the transactions flow through to your balance sheet. This is often confusing, so be sure to watch to the end so you can understand how the transactions are processed.
Hi! Kerry here from MyQuickBookKeeping.
Today, I’m going to show you how to assign a different currency to your customers and bank accounts on QuickBooks Online. Be sure to watch to the end of the video and I’ll show you how the transactions appear on your balance sheet, and you’ll be able to see where any variations due to currency adjustments appear.
In a previous video, I’ve walked through the steps to turn on multicurrency. If you’ve not yet turned it on, you can access that video and come back when you’re ready. A very common concern users of QuickBooks have about multicurrency is how to set up the accounts receivable and accounts payable in different currencies. QuickBooks actually does this for you like magic. I’ll walk through an example so you can see the result.
Click the Sales tab, select Customers. In the right hand corner, we can set up a new customer. Let’s name our company Australian Dollar Customers, not very imaginative but it will do for illustration. Under the Payment and Billing section of this page, you can scroll down and select the currency. This customer pays me with, let’s drop down and choose, Australian dollars, then save.
Now let’s create an invoice for this new customer. Notice that the exchange rate is displayed automatically. Let’s sell them an Employee Celebration. The rates displayed in the invoice in Australian dollars, and we can see below the equivalent amount in Canadian dollars. We’re somehow providing this service in Australia so the tax is exempt. Let’s save and close the invoice.
Let’s have a look at our balance sheet. It’s a little confusing here because everything is shown in Canadian dollars, however you can see that an account has been set up here, for accounts receivable, Australian dollars, separate to our normal accounts receivable account. And it shows up in the Canadian equivalent that we saw in the prior invoice.
Everything has flowed through and works. If you have customers or suppliers who offer you two currencies for whatever reason, you need to set them up separately. For example, Customer A: CAD, Customer A: USD. That way, you can process transactions in specific currencies as each customer can have only one currency assigned to it.
Let’s open an Australian dollar bank account to go with our new customer. On the left tab select Accounting. A Chart of Accounts will appear. In the top right hand corner, we select New. So this will be a bank account. Let’s make it savings, and we’ll call it Australian dollar savings.
And then here in the currency, we can select once again, Australian dollars. So we save it, and here it is, appearing in our account list. So to complete the circle, let’s have our customer pay us, and then we can see how that shows up on our balance sheet also.
Using the x at the top right, under Customers, choose Receive Payments. We will choose our Australian dollar customer and have them pay only $20, which we will deposit to the Australian dollar account that we set up. So let’s save that and have a look at our balance sheet.
Now remember, all of these numbers are displayed in the home currency. In this case, Canadian dollars. The $20 we collected and deposited is showing here as $19.58 CAD. And the balance in the accounts receivable is now showing up as $480.42 in CAD.
Now, if we check the outstanding amounts by customer, here we go, showing up is $490.68 in Australian. Everything’s tied together and it all flows through perfectly.
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