QuickBooks Multi-Currency Problems and Solutions

QuickBooks Online has the best features for multi-currency, which makes it one of the best e-commerce accounting software as eCommerce seller has a transaction in multiple currencies. Along with that QuickBooks multi-currency is a very handy option. Which makes it convenient for businesses, accountants/bookkeepers, and all QuickBooks users.

Why do we need a QuickBooks multi-currency option?

The accounting standards which are IFRS ‘international financial reporting standards and GAAP's generally accepted accounting problems, want you to present financial statements/ financial reports in your home currency. 

So, we will be converting the foreign currency transactions to home currency. While doing it manually will be time-consuming. So QuickBooks’s online multi-currency feature is the best solution to automate this foreign currency transaction requirement.

Which Subscription QuickBooks multi-currency option?

QuickBooks Online is essential and QuickBooks online plus has multi-currency features. QuickBooks online multi-currency option resolves the option of the exchange rate. It makes tracking the historical exchange rate tracking easier. But as with other automation, this also creates technicality involved associated with it, so you need a professional bookkeeper company.

Foreign currency transaction treatment becomes more accessible with the use of the QuickBooks multi-currency feature. But as technology offers solutions, there is always complexity. While automating foreign currency transactions, this might come as a problem, as with other automated software features.

There are many complexities associated with bookkeeping and accounting through QuickBooks for this we have a detailed amazon seller bookkeeping guide you can check through the link.

To which accounts can we assign QuickBooks multi-currency

For which account type foreign currency can be assigned;

1.      Bank

2.      Credit card

3.      Account Receivable

4.      Account payable

4 Most Common QuickBooks Multi-Currency problems and their solutions

Here are some problems and solutions that you may face while using QuickBooks online multi-currency features.

1.      Consider you have made a sale and the deposit you receive on 1^st January is 100 in GBP at the date USD to GBP was 1.2=1 and now on 1^st may the amount is transferred from GBP to USD at that time the exchange rate was 1.35=1. Here the problem of multi-currency appears your bank register will show the correct amount but when you run the balance sheet the GBP account will show an extra amount because of currency revaluation.  

Here is the step-by-step guide

Here is what the balance sheet will show on each date:

Balance sheet line items 

On the day when the sale and deposit and transfer

As discussed earlier the reports are in home currency. So, whenever we run the balance sheet this problem of exchange rate difference appears as a multicurrency issue.

Solution/ treatment:

·        Go to setting.

·        Then advance setting 

·        Go to currency

·        Then manage currency

·        From the drop done menu select evaluate.

This will resolve the issue by automated journal entry by Debit/credit Exchange gain or loss and debit/credit GBP.

2.                There is this problem you may face while using the multicurrency feature considering your home currency is USD and you have accounts currency CAD and GBP you can’t transfer directly from GBP to CAD or CAD to GBP.

Here is the solution to this multicurrency problem

You have to create a home currency clearing account and transfer the funds from both accounts.

3.                Once you have selected an account or customer or vendor account with multi-currency you can’t change it. But if you have to select that customer for another currency you will need to create a duplicate customer or vendor. 

4.                There is also a discrepancy with QuickBooks's online multi-currency feature that allows you to only draw your financial statements/reports with a single currency. It means that if you have a business in a different location you will have to buy different subscriptions to QuickBooks for that region. 

Conclusion

As per accounting standards and accounting standards and courtiers' laws and regulations, every business is supposed to translate all their multi-currency to home currency and record the exchange gain and loss on financial statements. So, QuickBooks this feature is very handy and makes QuickBooks the best accounting software to offer an automated solution to companies while complying with the IFRS, GAAP, and statutory obligation of translating foreign currency into home currency.