Many businesses rely on multiple currencies to function. If that’s the case, your company will be able to store money in multiple currencies with a multi-currency bank account. You’ll also need multi-currency accounting software like QuickBooks to streamline an otherwise complex accounting process.
Businesses that offer their goods and services to people around the world often have to deal with several different currencies. This is what is known as a multi-currency operation.
Multi-currency conversion enables a business to offer goods and services in multiple currencies while only receiving funds in a single base or home currency. Companies that target specific populations in nations other than their own benefit greatly from multi-currency conversions. This is increasingly common with e-Commerce retailers who ship products across borders.
What Is a Base Currency?
While transacting with multiple currencies each day is vital to many businesses, it can often cause great confusion when generating reports and calculating profits and losses. This is why multi-currency accounting systems use a base or home currency to generate your reports.
The base currency is essentially the one you decide to use to complete all your reporting, which is why it’s essential that you pick the appropriate one, as you can expect to see all your accounting reports in that currency.
Multi-Currency Accounting Software
If you work with numerous currencies, you must account for the differences in the amount you send or receive against the conversion rate at the time of the transaction. If you have multiple reporting intervals, the conversion rate at the date of that transaction must be used. A profit or deficit is recorded if it differs from the prior reporting value.
This is where accounting software with multi-currency features comes in handy. Accounting software like QuickBooks has a built-in multi-currency calculator that uses accurate currency conversion rates to ensure that your transactions are logged in the right currency and at the correct conversion rate. QuickBooks uses data provided by HS Markit exchange rates to establish the conversion rates. However, businesses can enter their own exchange rates manually as well.
QuickBooks Multi-currency is a handy feature that aims to simplify the multi-currency accounting process. If you have clients, suppliers, or bank accounts that use currencies other than your own, you could use this function to keep track of your multi-currency transactions.
It also makes it easy to keep track of exchange rate profits and losses, giving you the ability to keep track of transactions made in different currencies with ease.
When you turn on the multi-currency feature, you’ll be able to:
- Add, manage, and delete different currencies
- Assign different currencies to customers, suppliers, and accounts
- Make use of the QuickBooks conversion feature or enter exchange rates yourself
- Do your accounting in multiple currencies, but view your reports in a single currency
- View losses or gains on exchange rates
Need Help with Your QuickBooks Conversion or Multi-Currency Feature?
Switching to a new accounting system may seem daunting. The truth is that no two accounting systems are the same, so making the switch can be confusing and challenging. If your existing books contain multi-currency data, then converting data from one platform to another can be complex and time-consuming. However, SaaS Direct conversion team uses proprietary codes to move multi-currency between platforms accurately.
SaaS Direct is a multi-award-winning official QuickBooks Service Provider (QSP) in the US and Canada. A leader in data conversions with 20+ years of experience with clients across North America, Asia-Pacific, Europe & the Middle East. We move data error-free with zero downtime across 50+ major accounting systems and ERP. Talk to us if you need help setting up and running the multi-currency feature.