Post supplier bills in their own currency
By default, SKU.io posts every supplier bill to Xero or QuickBooks in your own currency. A supplier who bills you in yuan or euros then shows a home-currency balance in your accounting system, and the exchange gain or loss on paying it is invisible. Turn on Send supplier bills in their own currency and a bill on a foreign-currency purchase order posts in the supplier's currency instead, at the rate for the bill's date. Your accounting system then holds what you really owe the supplier and books the realized exchange difference itself when you pay.
Before you begin
- You can edit accounting settings.
- Automatic accounting is on. See How automatic accounting works.
- An FX gain/loss account is mapped. Go to Accounting → Settings → Nominal Code Mappings and set FX Realized Gain/Loss. The difference between the rate goods were received at and the rate they were billed at is booked there.
- QuickBooks Online needs Multicurrency switched on in QuickBooks. Without it, bills keep posting in your own currency, with a note naming the supplier's amount and rate.
- Xero needs a plan that holds foreign-currency documents.
Turn it on
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Go to Accounting → Settings → General.
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Under Sync behaviour, turn on Send supplier bills in their own currency.
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Click Save Changes. If a requirement is missing, such as the FX gain/loss account, the save explains what to set up first.
The switch applies to bills created from now on. Bills you already have keep posting in your own currency, so nothing already sent to your accounting system is restated. Turning it off later works the same way: bills created while it was on keep their currency.
What changes on a bill
Open a bill on a foreign-currency purchase order. Under its details, Bill Rate (accounting) shows the rate the bill posts at. SKU.io reads it from the exchange rates for the bill's invoice date. To use your own rate, click Edit, type it, and save. To go back to the date's rate, clear the box.
Hover over the label to see the rate the goods were received at. Your inventory keeps that receipt rate as its cost. Only the accounting changes:
| What | Where it goes |
|---|---|
| The bill | Your accounting system, in the supplier's currency at the bill rate |
| The cost of the goods | Inventory, at the receipt rate, as before |
| Receipt rate versus bill rate | Your FX Realized Gain/Loss account, so the purchase clearing account still clears to zero |
| Paying the bill | Your accounting system books the realized gain or loss between the bill rate and the payment's rate |
Once payments are recorded, the bill also shows Realized FX on payments, as a gain or a loss.
A worked example
Your currency is US dollars. A purchase order for CNY 10,000 is received when 1 CNY = 0.1380 USD, so inventory is valued at $1,380.00. The supplier's bill arrives when the rate is 0.1400:
- The bill goes to your accounting system as CNY 10,000 at 0.1400, or $1,400.00.
- The $20.00 between the receipt and the bill is booked to FX Realized Gain/Loss as a loss.
- Inventory stays at $1,380.00.
Payments, deposits and credits
- Payments use the rate for the payment date. When you record a payment on one of these bills, its FX Rate is the rate for the Payment Date, not the bill's rate. Change the date and the rate follows.
- Vendor deposits and vendor credits created while the setting is on are sent in the supplier's currency too, so your accounting system can apply them to the bill. A deposit or credit from before you turned the setting on is still in your own currency. Your accounting system can't apply it to a bill in another currency, so apply it by hand there.
- Supplier payment runs record the payment-date rate their payments carry.
Your own rates on past dates
If you set a currency's rate by hand, SKU.io keeps each rate you type with the date it took effect, and a payment uses the rate that was in force on its date. Those rates are listed, read-only, on the History tab of Settings → General → Currencies. See Work in multiple currencies.
When your accounting system refuses a bill
If a bill can't be sent, the reason shows on the bill, on its accounting entry, and in the accounting inbox. The usual causes:
- The QuickBooks supplier is set up in another currency. QuickBooks can't change a supplier's currency once it has transactions, and SKU.io never creates suppliers in your QuickBooks. Create a supplier there named after the original with the currency in brackets, for example Shenzhen Parts (CNY), in that currency. On SKU.io's QuickBooks Vendors tab, click Refresh From QuickBooks, then retry. SKU.io uses that supplier for that currency from then on.
- Xero can't hold the document in that currency. Add the currency in Xero, or check that your Xero plan supports multiple currencies, then retry.
Month-end revaluation
SKU.io doesn't revalue open foreign-currency bills at month end. Xero's Currency Revaluation and QuickBooks' Home currency adjustment do it from the bills they already hold. So at a month end where your accounting system has revalued, its accounts payable balance differs from SKU.io's by the unrealized amount. That difference is expected.