QuickBooks Multicurrency is a feature that allows you to work with multiple currencies in your accounting and financial transactions. This feature is useful for businesses that deal with international customers, vendors, or have foreign currency accounts. Here’s how to use QuickBooks Multicurrency:
1. Enable Multicurrency:
Before you can use Multicurrency in QuickBooks, you need to enable it. To do this:
- In QuickBooks Desktop: Go to “Edit” > “Preferences” > “Multiple Currencies.” Check the box that says “Company Preferences” for “Use Multicurrency.”
- In QuickBooks Online: Go to the Gear icon (Settings) > “Account and Settings” > “Advanced” > “Currency” section. Enable the “Multicurrency” option.
2. Set Your Home Currency:
Your home currency is the currency in which you primarily do business. QuickBooks will require you to select a home currency when you enable Multicurrency. This is typically your local currency.
3. Add Foreign Currencies:
You can add foreign currencies to your QuickBooks account. To do this:
- In QuickBooks Desktop: Go to “Lists” > “Currency List.” Click the “Currency” dropdown and select “New.” Then, enter the currency code, name, and exchange rate.
- In QuickBooks Online: In the Currency section (referenced above), you can add and manage foreign currencies.
4. Set Exchange Rates:
Exchange rates determine the conversion between your home currency and foreign currencies. You can set these manually or have QuickBooks update them automatically. To set exchange rates:
- In QuickBooks Desktop: Go to “Lists” > “Currency List.” Double-click on a foreign currency to edit it, and you can set the exchange rate there.
- In QuickBooks Online: In the Currency section, you can set exchange rates manually or set up automatic updates from reputable sources.
5. Enter Multicurrency Transactions:
When entering transactions involving foreign currencies, you’ll need to specify the currency for each transaction. For example, when creating an invoice or a bill, you can select the currency from the currency dropdown menu.
6. View Multicurrency Reports:
QuickBooks will automatically track and convert foreign currency transactions to your home currency. You can view reports that provide insights into your Multicurrency transactions, such as:
- Profit and Loss by Currency
- Balance Sheet by Currency
- Transaction List by Currency
- Transaction List by Exchange Rate
7. Revalue Foreign Balances:
If you hold foreign currency accounts or have outstanding foreign currency transactions, you may need to periodically revalue them based on changes in exchange rates. QuickBooks can help you with this process.
8. Be Accurate and Consistent:
It’s crucial to be accurate and consistent when working with Multicurrency in QuickBooks. Ensure that exchange rates are up to date, and transactions are entered correctly with the appropriate currencies.
Don’t let unpaid invoices accumulate. Our bookkeeper for small business actively manages accounts receivable to ensure you receive the payments you’re owed.
Remember that Multicurrency can make your accounting more complex, so consider seeking the guidance of an accountant or financial advisor who is familiar with foreign currency transactions if you’re dealing with significant international operations.
