Enter a foreign currency transaction in QuickBooks Online
When it comes to foreign currencies or multicurrency in QuickBooks Online, bookkeeping can quickly get messy if you’re not careful about entering your expenses.
Let’s take a look at an example of a common transaction regarding a foreign Amazon marketplace and multicurrency in QuickBooks Online US.
You’ll need to have multicurrency enabled on QuickBooks Online US in order to be able to access these settings.
Exchange rates change day to day or from one second to the next. When Amazon charges you, your credit card or bank account may have a different amount in USD.
We’ll use CAD and USD in this article, but the concept is the same regardless of what currency you’re using.
Let’s say you start selling on Amazon Canada (CA). For your first settlement, you have a balance of -$50 CAD because of various fees. We’re using Amazon CA as the Payee here (the exchange rate field will only appear if your Vendor has a non-USD currency associated with it).
Amazon charges your credit card for $50 CAD, but the charge shows up on your card as $37.93 USD (using exchange rates for August 1, 2019). But you’re going to enter the transaction on August 20, 2019. That $50 CAD is now $37.54 if you’re not adjusting values on the document.
Note that even though we selected August 1, the Total (USD) charge still doesn’t match because of the fluctuations in rates throughout the day.
This difference between the currency can easily cause a discrepancy between your accounts in QuickBooks Online if you’re just entering in transactions monthly and using the default exchange rate.
QuickBooks Online doesn’t allow you to edit the Total (USD) amount. Instead, you’ll need to figure out the correct exchange rate.
To properly calculate the values, you’ll need to take how much your credit card was charged in USD. Then take the amount in CAD that you owe.
Divide the USD by the CAD amount to get the correct exchange rate so that you can enter this in the right field in QuickBooks Online.
Enter the exchange rate to as many decimal places as you need for the Total (USD) to match what you were charged on your credit card.
You may need to enter in a few more decimal places to get the correct value. Once you click OK, QuickBooks Online will recalculate the Total (USD). It should now match what your credit card charge shows for that transaction.
If it doesn’t, recalculate the rate and check that you’ve entered the correct values to the necessary decimal place, whether that’s 4 places or 7.
Notice in the corrected exchange rate above, the Total (CAD) value is correct and the Total (USD) value is now correct.
This document shows that you’re paying a vendor, Amazon Canada, $50 CAD. Your credit card account will show a charge of $37.93.
Whether it’s an expense or a settlement payment, you’ll need to go through the same process of calculating the correct exchange rate and verifying that the values are correct.
For instance, when you receive a disbursement or payment from Amazon for your sales, your Amazon Canada seller account will show a deposit in CAD. But the bank account may show a deposit in USD.
The process is the same here: edit the deposit document with the correct exchange rates to reconcile the amounts.
Read our other articles on QuickBooks Online below.