Welcome to the Fit Small Business Xero trainingcourse! In this lesson, we’re going to cover howto set up multiple currencies in Xero.
To follow along with me, log into your Xeroaccount now, or click the link below this video for a free 30-day trial of Xero.
You can also click this link to access ourfull Xero course and other helpful resources.
Let’s get started! With today’s advanced technology, it’spretty 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 inGermany for a project that utilized contractors from Brazil.
Xero's powerful multi currency accountingwill help you bid, bill, and transact in the currency that's most advantageous to yoursmall business.
Even better, the reporting won't leave youcross-eyed since all of your transactions can be reported in your native currency (USD).
There are many benefits to using the multiplecurrency 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 Editionpricing plan in order to use the multiple currency feature.
Multiple Currency is not available with theStarter or Standard editions of Xero.
Your base currency is your default currencyin Xero.
Most of your reports will use this currency.
This was set up in the Organization and Financialsettings lesson.
You can click here to access this lesson.
You can add as many currencies as you needto (up to 160 currencies to choose from) but once you add a foreign currency you cannotdelete it.
We will use our fictitious company Acme WebPros Plus to demonstrate how multiple currency works.
To set up multiple currency, from the XeroDashboard, 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 multiplecurrency 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.
With multiple currency, you can see the exchangerate that was used on a previously entered transaction, today’s exchange rate, or runa 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.
Let’s say you bid on a project with a partnerin Italy.
The work will be done by contractors in Chileand India.
Xero will do the calculations behind the scenesso that you can bill and pay all parties in their native currency but still track andrun 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 exchangerate with your supplier or your customer that you would like to use instead of the currentrate.
You have the ability to change the exchangerate directly on an invoice or a bill.
We will cover how to do this in the how toinvoice 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 ForeignCurrency Xero’s multiple currency feature also allowsyou 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 useof your funds.
In the how do I set up a bank/credit cardaccount lesson, we will walk through the steps of how to set these accounts up with the appropriatecurrency.
Click the link below to access this lesson.
Assign a Currency to a Customer or VendorContact This is another benefit of using the multiple currency feature.
This allows you to view account balances inthe foreign currency, and create new transactions that will automatically default to the currencythat 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 thatwould result in an over/underpayment.
We will walk through how to set this defaultcurrency up in the how to invoice a customer and how to create a bill lessons.
To access these lessons, click the link belowthis video.
Foreign Currency ReportsXero automatically keeps track of all of the exchange rate calculations for every transactionso that you don’t have to.
All of your reports display these transactionsin your native currency, including foreign held assets.
The same is true for all accounts receivableand accounts payable.
However, there are 3 reports in Xero thatcan be displayed in another currency; the balance sheet report, income statement andbudget variance reports.
By default these reports will display in yournative currency but you can easily change the report options to display the currencyfield where you can choose one of the other currencies you have set up for your organization.
Finally, there are three foreign currencyreports 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, accountsreceivable and bank accounts revalued in your base (home) currency.
It also shows your organization’s currentforeign currency exposure for each foreign currency you have set up.
Let's go ahead and run this report.
Select your date range.
Here is a sample Foreign Gains and LossesReport 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 foreach transaction.
To get to this detailed report, you have todrill 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 thegains or losses on current outstanding sales invoices or bills.
To get to this detailed report, you have todrill down on the unrealized gain totals located on the Foreign Currency Gains and Losses report.
That wraps up the lesson on how to set upmultiple currencies in Xero.
To access our full Xero course or any of theother lessons in this series, click this link.
You can also find a link below this videofor a free 30 day trial of Xero.
If you have feedback about this course orif you have any questions, please leave a comment below.
Also don't forget to subscribe!.