Multi-currency: billing & payments [in-depth guide]

Guide contents: Client invoices | Receipts | Payments | Next step

NOTES:

• Receipts must have the same currency as the client invoice currency.
• Payments must have the same currency as the vendor invoice currency.
• When a receipt or a payment with a certain currency and exchange rate is applied & posted to an invoice for the same currency and a different exchange rate, this will create a realized gain or loss. The general ledger holds debits & credits in both transaction & home currencies. When posted, debits & credits are converted to the home currency, any rounding error will generate the posting of an entry in the general ledger to balance the transaction both in the transaction and home currencies.
• The same goes for credits applied to invoices, or advance bills applied to invoices.
• Transfers: Labor transactions can be transferred between projects with different currencies. Expenses cannot be transferred between projects with different currencies.

Voiding an invoice vs. applying a credit memo.  

Void - if the intention is to void the original invoice as is and retain the currency rates, then void the invoice.  The void will set the currency rate to the original invoice rate. There would be no 'realized gain or loss' difference.  

Credit memo - if the intention is to offset the amount owed, a credit memo applied to an invoice will be based on the current rate of the invoice date on the credit memo. This may cause a 'realized gain/loss'.  

NOTE:  Sales tax may post into the sales tax account at one rate from the original invoice. A credit memo may cause a difference in the sales tax reversing out if the credit memo has a different currency rate.

Client invoices

Select the currency on the Client invoice screen. If the client invoice is linked to a project, it must be in the same currency as the project. The AR account must be in the same currency as the invoice.

Related projects, receipts, credits, and advance billings must be in the same currency.

Receipts

Set the currency on the receipt to match the invoice to be paid. The invoices applied must have the same currency as the receipt currency.

When posting the receipt and when different exchange rates apply, a realized gain/loss will be posted.

Realized gain = Amount applied * difference between exchange rates = 1520 CAD * (0.757 - 0.739) = 27.21 USD

Payments

Similar to receipts.

The payment must have the same currency as the vendor invoice being paid.

Note:  If you have open vendor invoices for payment in foreign currencies, the 'to pay as of' amount will be based on today's exchange rates in the company exchange rate table. For example, if I have a  2,000 EUR vendor invoice due:  EUR 2000 * 1.1395 (currency rate) = $2279 USD.  The 'to pay as of' on the Today purchasing page will show the amount $2279 as the HC amount due.

Next step

Reports