Welcome to the Fit Small Business Xero training course!
In this lesson, we’re going to cover how to set up multiple currencies in Xero.
To follow along with me, log into your Xero account now, or click the link below this
video for a free 30-day trial of Xero.
You can also click this link to access our full Xero course and other helpful resources.
Let’s get started!
With today’s advanced technology, it’s pretty easy to do business with customers
and suppliers located anywhere in the world.
In today's flat, hyper-connected economy, US small businesses can tap into customer
bases and labor markets in any number of countries.
It's not uncommon to be billing a client in Germany for a project that utilized contractors
from Brazil.
Xero's powerful multi currency accounting will help you bid, bill, and transact in the
currency that's most advantageous to your small business.
Even better, the reporting won't leave you cross-eyed since all of your transactions
can be reported in your native currency (USD).
There are many benefits to using the multiple currency feature in Xero.
We will discuss each of these in detail in this lesson.
Some tips to keep in mind when setting up multiple currencies are:
You must be signed up for a Premium Edition pricing plan in order to use the multiple
currency feature.
Multiple Currency is not available with the Starter or Standard editions of Xero.
Your base currency is your default currency in Xero.
Most of your reports will use this currency.
This was set up in the Organization and Financial settings lesson.
You can click here to access this lesson.
You can add as many currencies as you need to (up to 160 currencies to choose from) but
once you add a foreign currency you cannot delete it.
We will use our fictitious company Acme Web Pros Plus to demonstrate how multiple currency
works.
To set up multiple currency, from the Xero Dashboard, navigate to General Settings as
Scroll down to the Features section, and select Currencies.
To add a currency, click on the "Add Currency" button and select the currency from the drop down.
We'll go ahead and select the New Zealand Dollar.
You'll notice a message that says:
The next step is to click the add currency button
Remember, once you add a currency to Xero you cannot delete it.
Some of the benefits of using the multiple currency feature in Xero are:
Hourly Exchange Rate Updates: Exchange rates for over 160 currencies are
updated on an hourly basis in Xero.
This information comes directly from XE.com.
With multiple currency, you can see the exchange rate that was used on a previously entered transaction,
today’s exchange rate, or run a report to see the conversion rate that was
used for a previous transaction.
Send/Receive documents in a Foreign Currency: As mentioned in the previous section, you
can send and receive invoices, purchase orders, project bids and contract proposals in a foreign
currency.
For example, you can submit or receive bids in a foreign currency with the confidence
that you’re accurately gauging the value in your native currency.
Let’s say you bid on a project with a partner in Italy.
The work will be done by contractors in Chile and India.
Xero will do the calculations behind the scenes so that you can bill and pay all parties in
their native currency but still track and run your reports in your native currency,
Change/Edit Exchange Rates: While the exchange rates are updated hourly
in Xero, you may have an agreed-upon exchange rate with your supplier or your customer that
you would like to use instead of the current rate.
You have the ability to change the exchange rate directly on an invoice or a bill.
We will cover how to do this in the how to invoice a customer and how to create a bill
lessons.
Click the link below to access these lessons.
Add a Bank or Credit Card Account in a Foreign Currency
Xero’s multiple currency feature also allows you to manage your foreign bank and credit
card accounts.
Since the exchange rate is updated hourly, you always know the value of your foreign
held assets in your native currency.
This will allow you to make the wisest use of your funds.
In the how do I set up a bank/credit card account lesson, we will walk through the steps
of how to set these accounts up with the appropriate currency.
Click the link below to access this lesson.
Assign a Currency to a Customer or Vendor Contact
This is another benefit of using the multiple currency feature.
This allows you to view account balances in the foreign currency, and create new transactions
that will automatically default to the currency that you have assigned to a customer or supplier.
By automatically viewing the converted rates, you can ensure that you never send an invoice,
submit a bid or pay a bill in a currency that would result in an over/underpayment.
We will walk through how to set this default currency up in the how to invoice a customer
and how to create a bill lessons.
To access these lessons, click the link below this video.
Foreign Currency Reports Xero automatically keeps track of all of the
exchange rate calculations for every transaction so that you don’t have to.
All of your reports display these transactions in your native currency, including foreign
held assets.
The same is true for all accounts receivable and accounts payable.
However, there are 3 reports in Xero that can be displayed in another currency; the
balance sheet report, income statement and budget variance reports.
By default these reports will display in your native currency but you can easily change
the report options to display the currency field where you can choose one of the other
currencies you have set up for your organization.
Finally, there are three foreign currency reports available for you to run in Xero.
The Foreign Currency gains and losses report, the Realized Gains and losses report and the
Unrealized gains and losses report.
Let's go ahead and see how to run the
Foreign Currency Gains and Losses Report
From the reports menu, select All Reports.
Scroll down to the accounting section and find Foreign Currency Gains and Losses.
This report shows your accounts payable, accounts receivable and bank accounts revalued in your
base (home) currency.
It also shows your organization’s current foreign currency exposure for each foreign
currency you have set up.
Let's go ahead and run this report.
Select your date range.
Click update.
Here is a sample Foreign Gains and Losses Report for the January 1st to March 31st time frame.
The second report that I mentioned,
the Realized Gains and Losses Report,
will show the gains or losses for each transaction.
To get to this detailed report, you have to drill down on the realized gain located
on the Foreign Currency Gains and Losses report here.
We have our Realized Gain column here. So if there are any figures in this column, you can drill down to see realized gains and losses.
The third report that I mentioned is the Unrealized Gains
and Losses Report
That column is located right here, next to Realized Gain.
This report shows the current value on the gains or losses on current outstanding sales
invoices or bills.
To get to this detailed report, you have to drill down on the unrealized gain totals located
on the Foreign Currency Gains and Losses report.
That wraps up the lesson on how to set up multiple currencies in Xero.
To access our full Xero course or any of the other lessons in this series, click this link.
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