Multiple currencies in QuickBooks is a feature that enables a firm to assign a specific currency type to profiles like that of Customers, Vendors, Price levels, Bank Accounts, Credit Card Accounts, Accounts Receivable and Accounts Payable.
Apart from this facility, this feature also enables the following:
- Tracking and managing currency exchange rate fluctuation.
- Paying and receiving of payments in a vendor’s or customer’s currency
- Revaluing a currency
This feature is beneficial for a firm which deals in multiple currencies. Once the multi-currency feature is enabled, you should know that it can’t be hidden or turned off in QuickBooks. The home currency can’t be changed too.
What are the consequences?
Once the feature has been enabled, things that are ought to take place:
- Depending on the location of your country, the current currency gets set as the default currency
- You can change rates as per updates
- As soon as a new vendor is added, the currency can be added specific to their country
- Currency column will be flashed in the Chart of Accounts
- The foreign currency automatically gets converted to the home currency
How to go about it?
It is important for a firm or user to understand the steps involved in turning the feature on.
There are multiple steps to get this done. Let’s explore the steps that can be helpful:
- Multi-currency feature needs to be turned on. First of all from the QuickBooks Edit menu, choose Preferences
- Now Multiple Currencies should be selected from the left panel
- After this, we need to navigate to the Company Preferences tab and should click on Yes, I use more than one currency
- Now from the drop down, select the Home Currency
- After this step, time for adding foreign vendors and customers
- Now in this step assign one customer to each currency
- By default, all the customers as well as vendors will be assigned the home currency as soon as the feature is turned on. If you choose to close open balances, you need to use the same home currency vendors and customers
- For any new sale or purchases, you may use the foreign currency, however the home currency should be continued to use unless you close the open balances
- If there is any similarity in the name of the vendors, tweak it a little so that there is no confusion later. You can do this by selecting Customer Center from Customer or Vendor menu. In the Customer Name, select New Customer or Job, then from the drop down choose New Customer or New vendor
- Now assign the Customer or Vendor you wish to add and then the Currency
- After this click on OK
- Time to add foreign accounts by assigning one currency for each account so that you will be able to create new accounts for foreign account
- All the existing accounts will be assigned to home currency by default
- Continue using the same home currency until the open balances are closed
- Now assign currencies to Bank, Credit Card, Accounts Receivable and Accounts Payable
- From the menu Lists, select Chart of Accounts
- Right click and then select New
- Appropriate Account Type needs to be chosen and then a name needs to be assigned
- Now click on Save and Close
- Now update exchange rates by selecting Currency from Lists menu
- Click on the Activities button and select Download Exchange Rates
- You need to now create foreign transactions. If you have assigned Home currency to an existing customer and you are expecting a payment, don’t try to change the currency to foreign currency otherwise the transaction will be incomplete
This feature of Multi currency is available for QuickBooks Essential and QuickBooks Plus. It is important that one uses an expert or a professional so that there is no discrepancy in the adjustments of currencies. It is important for any firm dealing with more than one country. It makes task friendlier and convenient so that no glitch happens while making any important decision.
It is difficult for one to keep updated with the exchange rates and it is not easy. Exchange rate can be updated manually which is the most preferred method and staying on top of your transactions is always the best idea.
There are pros and cons of enabling multi-currency feature. It can help you from downloading latest exchange rates to separating one country’s vendor from another. The cons is that once this feature is enabled, there will be constant pop ups reminding you of any new customer or vendor updated. This should be helpful when you are a forgetful person and need to be reminded of the currencies you need to enter. The little reminders can be an annoying factor too. Although, it is tedious to get the feature started, the features are trustworthy and beneficial. One more important thing to keep in mind is to use the same rate as the original invoice or bill.
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