Part 4 - Accounting for Multiple Currencies

This post follows from Part 3 - Dealing with Fixed Assets.

This post will go through managing multiple currencies in Xero. This post will be useful to those who buy and/or sell products/services in foreign currency because it’ll help you to account for those currency fluctuations. Multi-currency in Xero is currently only available for those with a Xero subscription called “Premium 10” which is $60 per month. You upgrade by logging in, going to “My Xero” area, clicking on the “Upgrade” link and then choosing the Premium 10 plan.

This post will cover:

  • Adding more than 1 currency to Xero
  • Creating foreign currency invoice
  • Processing a purchase shown in a foreign currency

Adding more than 1 Currency in Xero - Premium subscription

  1. Go to Settings > General Settings > Currencies > Click “Add Currency”
  2. Choose a currency and click “Add”. Only choose the ones you need to streamline your accounts.
  3. Now you’ll be able to invoice and make payments with that currency.

Creating foreign currency invoice - Premium subscription

  1. Create sales invoice. If you don’t know how to do that - review Invoicing in Xero.
  2. While creating the invoice, click on the Currency drop down and select the currency you’ll be invoicing in.
  3. Select your tax rate, for sales, you’ll be choosing $whatever_currency Export which is 0%.
  4. Save your invoice.

Processing foreign currency purchases - Premium subscription

  1. Create a bill. If you don’t know how to do that - review Making Purchases in Xero.
    • While doing this select Consumer Tax on Imports in the Tax Rate area and for the Account field, choose the consumer tax account - this is likely to be $whatever_currency Import.
  2. Then process the bill.

Foreign currency gains and losses are calculated from the time of invoicing to the point of payment. It’s a complex area and each individual situation should be managed by your accountant. Please send me a message if you need a recommendation to a good accountant.

Now… let’s more on to the next part - Part 5 - Weekly and Monthly Routine Tasks

Next: Part 3 - Dealing with Fixed Assets

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