Appendix B
Multiple Currencies
In this appendix:
• Set up and configure multiple currencies
• Set up and configure customers and vendors for multiple currencies
• Create transactions in other currencies
• Run reports
This appendix provides an overview of the multiple currencies feature in QuickBooks. If you do business with customers or vendors in other countries, this feature allows you to create transactions in their currencies and track the exchange rates so you always know what the transactions mean to you in US Dollars.
Set Up and Configure Multiple Currencies
Before you can begin creating transactions in different currencies, you have to complete some configuration and setup tasks.
It’s important to be aware that, unlike most of the configuration preferences available in QuickBooks, once you enable multiple currencies, you can’t disable it. If you’re already using QuickBooks (either because you updated your company files from a previous version or because you began creating transactions before deciding to use multiple currencies), be sure to back up your company file before enabling this feature.
Creating a Special Backup
When you create your backup before turning on multiple currencies, don’t use your normal backup routine. Instead, name the backup file differently so you can identify it easily and avoid having the multicurrency backup file overwritten with “regular” backups. For example, when you save your backup file, you might change the name of the file from the usual <CompanyFileName>.QBB to <CompanyFileName>-BeforeMulticurrency.QBB.
If you change your mind later and decide not to use multiple currencies and you don’t want to restore the backup (because you’d have to re-enter all the transactions you’d created while multiple currencies was enabled), it’s okay to keep using the company file with multiple currencies enabled as long as you use customers, vendors, and accounts that are not linked to another currency. Some windows and dialogs will continue to have an extra field for currency, but no financial information will be compromised.
Enabling Multiple Currencies
To enable the multiple currencies feature, choose Edit | Preferences and click the Multiple Currencies category icon in the left pane. In the Company Preferences tab (see Figure B-1), select Yes, I Use More Than One Currency.
FIGURE B-1 |
Enable multiple currencies and select your home currency. |
When you select Yes, QuickBooks displays a warning message:
If you’ve already made a backup, as discussed in the previous section, you can continue. If not, stop the process and create your backup. Then enable multiple currencies.
The Preferences window offers the opportunity to change your home currency from US Dollars to another currency. Changing your home currency is not a good idea, because QuickBooks tracks payroll, sales tax, online banking, and other basic data in US Dollars only.
Selecting Currencies
QuickBooks provides a long list of currencies you can use, but by default only the commonly used currencies are active. You can change the list of active currencies to suit your own needs. Remember that only active currencies appear in the drop-down list when you’re assigning a currency to a customer or vendor.
Choose Company | Manage Currency | Currency List to open the Currency List window seen in Figure B-2. If the list includes only active currencies, select the Include Inactive check box to see the entire list.
FIGURE B-2 |
Activate the currencies you need. |
To activate an inactive currency, click the X in the leftmost column to remove the X; to make an active currency inactive, click the leftmost column to place an X in the column.
Notice that each currency has a three-letter abbreviation; for example, US Dollar is USD. You can, if necessary, create a currency if the one you need doesn’t appear on the list, but keep in mind that QuickBooks can’t download exchange rates for currencies you add manually. With the Currency List window open, press CTRL-N to open the New Currency dialog and configure the currency.
Tracking Exchange Rates
Because QuickBooks tracks both the customer/vendor currency and its worth in your home currency, you need to make sure the exchange rate is accurate. If the exchange rate isn’t accurate, your financial reports, which use US Dollars, won’t be accurate.
To update the exchange rate for all your active currencies, choose Company | Manage Currency | Download Latest Exchange Rates. QuickBooks goes online to get the current rates (you don’t see an Internet page; all of this is done in the background). When your active currencies have been updated, QuickBooks displays a success message, and you can now see the updated exchange rates in the Currency List.
Manage Customers and Vendors with Foreign Currencies
You need to identify the currency of every customer and vendor in your company file. QuickBooks automatically assigns your home currency (USD) to all customers and vendors, so you need to change only those that do business in a different currency.
Creating Customers and Vendors with Currency Assignments
When you create customers and vendors who do business in another currency, the basic steps are the same as creating any new customer or vendor in QuickBooks. The only differences are the existence of a Currency Field in the New Customer or New Vendor dialog and the lack of an Opening Balance field when you select a currency other than USD.
As you can see in Figure B-3, QuickBooks inserts US Dollar in the Currency field, but you can choose another currency from the drop-down list (which displays only those currencies you’ve marked Active).
FIGURE B-3 |
If new customers or vendors you’re creating use a foreign currency, select their currency from the drop-down list. |
ProAdvisor Tip: As you create a new customer or vendor and assign them a new currency, QuickBooks automatically adds the following accounts to your chart of accounts: an Accounts Receivable account for each currency and an Accounts Payable account for each currency.
Changing Currency for Existing Customers and Vendors
You can change the currency assignment for existing customers and vendors only if they have no transactions associated with their names. It doesn’t matter whether the current open balance is $0.00; the existence of any transaction prevents you from changing the currency. For those customers and vendors, you must create a new entity with the new currency.
In addition, you cannot merge customers or vendors that use different currencies. To edit the currency of an existing customer or vendor that has no existing transactions, open either the Customer or Vendor Center, select the name that you want to edit, and click the Edit icon in the upper-right of the Information pane. Select the currency from the drop-down list in the Currency field, and click OK.
If you need to change the currency assignment for customers or vendors who have transactions associated with their name, or you need to do business with them in more than one currency, see the next section.
Creating New Customers and Vendors for Multiple Currencies
To create a new customer or vendor for existing accounts with a foreign currency specification, create the new entity using the following guidelines.
In the Name field, use the same name as the existing entity, but add text to make the name unique. (QuickBooks does not allow duplicates in the Name field.)
It’s best to add text after the name, so the customer/vendor appears in the right place in drop-down fields in transaction windows. For example, in Figure B-4, a new customer is created to assign a new currency to an existing customer by adding a three-digit abbreviation for the customer’s currency to create a unique name (note that you’ll still see the existing customer name in the Customer & Jobs list).
FIGURE B-4 |
The currency is added to the new customer’s name; everything else is the same as the existing customer. |
Remember that the data in the Name field doesn’t appear on transaction documents; instead, QuickBooks uses the data in the Company Name and Address fields (and for vendors, there’s even a field labeled Print Name On Check As).
Managing Existing Open Transactions
When you create new customers and vendors, you have to manage existing open transactions using the original customer or vendor since you cannot accept or make a payment linked to the original entity using the new entity. When the open balance for the original entity becomes zero, you can make the original customer or vendor inactive so the listing doesn’t appear in drop-down lists in transaction windows. Be sure to use the new entity you created for all new transactions.
Viewing Currency Data in Customer and Vendor Centers
After you’ve enabled multiple currencies, the Customer Center and Vendor Center display currency information in both panes.
In addition, QuickBooks makes the following changes automatically:
• In the List pane, the currency is noted for each customer/vendor and the current balance total displays using the customer/vendor currency.
• In the Transactions tab of the Details pane, the Amount and Open Balance columns display amounts in the currency of the customer or vendor.
You can change these default settings to make it easier to understand the data you see in the centers.
Configuring the List Pane
In the List pane, you can add the current balance total in USD to save yourself the need to calculate the “real money.”
You can either remove the Balance Total column for the foreign currency or display both Balance Total columns. If you frequently talk to vendors or customers about current balances, it’s handy to have the foreign currency balance in front of you, so having both amounts display makes sense. However, to save room in the List pane, remove the Currency column.
You can add (or remove) columns to the list by right-clicking anywhere in the list and choosing Customize Columns.
Create Transactions in Other Currencies
When you open a sales or payment transaction window, QuickBooks automatically takes care of the currency issues by adding fields to the transaction window.
If the customer or vendor currency is USD, you won’t see much difference between the transaction window for multiple currencies and the same transaction window before you enabled multiple currencies. The only real difference is that the text “USD” appears for “Total” amounts.
If the customer or vendor is configured for another currency, the transaction window changes to provide the information you need. For example, Figure B-5 shows an invoice for a customer in Europe, and Figure B-6 shows a vendor bill for a vendor in the UK who does business in Euros.
FIGURE B-5 |
This invoice displays all the data needed to see the sales total for this invoice in both US Dollars and Euros. |
FIGURE B-6 |
When the amount of the bill is entered in Euros (which is what the bill that arrived showed), QuickBooks also displays the amount in USD. |
Notice the following about these transaction windows:
• The A/R or A/P account is specific to the currency.
• The amounts in the line items are displayed in the customer/vendor currency.
• There are two totals: one for the transaction currency and one for USD.
• The Exchange Rate field displays the exchange rate used when this transaction was created.
The printed versions of transactions that are sent to customers (invoices, credits, and so on) and vendors (checks) do not display any fields or data related to USD; those fields appear on the screen only for your convenience.
Decide on an exchange rate update schedule that makes sense to you. Keep in mind that if the exchange rate changes between the day you enter an invoice or bill and the day you receive a payment or make a payment, QuickBooks automatically adds an Other Expense account named Exchange Gain or Loss to track the net amounts that accrue from adjustments in exchange rates for current open balances.
Create Reports on Multiple Currency Transactions
By default, all reports on customer and vendor transactions (such as Aging, Sales, Purchases, and so on) are displayed in your home currency (USD). You can modify the reports so they display the appropriate currencies.
• For Summary reports, click Customize Report, and in the section labeled Display Amounts In, select The Transaction Currency.
• For Detail reports, click Customize Report and select Foreign Amount in the Columns list. You may also want to add the Currency column.
Memorize these reports, using a name that reflects the contents (such as Transaction Currency), so you don’t have to customize them each time you create them.
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