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Oct 10

XERO Accounting Software: Foreign Currency (Part One)

Posted by Carol-Ann Brouwer at Friday, October 10, 2014

As a global Xero trainer, the ease of Foreign Currency tops my personal list of favorite features. (Okay, Cash Coding is a close second!) I think both more experienced users and those new to Xero will agree it offers outstanding design and simplicity of use. 

As Xero gains expanding market share around the world, accounting partners benefit from the ability to build a global practice. With five clients on Xero, an accounting partner is given a partner listing on the Xero website. Not only are there no limits for where you can work with a client, this offers more opportunity for new clients to find your accounting practice. Business organizations are equally impressed by this feature in Xero. 

I’ve worked as a trainer for desktop software and in my experience it was not uncommon to need half a day in a classroom to teach the many steps needed to setup and use the Foreign Currency feature. Unfortunately, even after training and setting everything up “properly” typically the Foreign Currency functionality left much to be desired. 

The slightest rounding issue was problematic and the famous message “data inconsistencies have been detected” was far too prevalent, leaving the end user frustrated and having to deal with what was now deemed corrupt data. (Ugh!) 

I should also mention that you still needed to calculate your realized gain or loss and create the appropriate entry, which we all know means lost productivity time. The entire end user experience with Foreign Currency would make you want to run away! 

By comparison, the exceptional design and ease of using Xero far surpasses these other choices of Desktop or Cloud, some of which are still trying to get existing Foreign Currency mastered. Several cloud solutions do not even currently offer Foreign Currency. 

First consider the value of the current pricing point: The additional price point that Xero offers for Foreign Currency is a bargain in terms of time savings alone. Time is money as they say; cost effective is an understatement! 

Highlights of Foreign Currency within Xero: 

It is connected to XE.Com to offer the most current rate, updated hourly. Agreed to a specific price with your customer? No problem! The rate can be overridden at the time of transaction. Gain or Loss Calculation? Done for you at time of transaction (give or take an hour). No surprise this big time saver is popular with Xero users. 

Simplicity of Setup: 

Base Currency - It is important to note that when setting up an Organization in Xero, it will always default the country where taxes are paid. 

Let’s use U.S.A. as base currency for our example setup. 

Create the Organization in the Base Currency: 

To Activate the Foreign Currency: Add Canadian Dollar as Foreign Currency (Premium Plan) 

  • Step 1: From the Settings Tab-Select General Settings

  • Step 2: Features section-Select Currencies

Okay. That’s only 2 clicks! And no headaches! 

Contacts - The user has the ability to set the appropriate currency as a default for the Contact from the Edit Screen. 

Chart of Accounts - It is simple to Add a bank Account in Foreign Currency: 

What about a Sales Invoice? It is easily created in Canadian Dollars: 

Note the Sales Invoice created has both the Exchange Rate and the Unrealized Gain. 

Generating a Bill? The example below was created using Australian Dollars: 

Note the Bill created has both the Exchange Rate and the Unrealized Gain. 

Inspired to find out more about how Xero saves you time, money, and aggravation with global clients? Visit us online at Accounting Anywhere. You can also sign up for a free trial. 

Always seek tax advice for your Accounting Professional when dealing with Foreign Currency and particularly the necessary sales tax obligations.

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