Processing multi-currency sales
Up until now, the process of converting a Non-Home currency transaction into your Home currency has involved a lot of steps, creating the opportunity for errors. To see how complicated it can be, you can read the related Tips & Tricks section in the QuickBooks Online help.
Let’s review the anatomy of the existing multi-currency sales transaction to understand how a sale in a different currency is processed by PayPal.
There are series of transactions involved:
- PayPal credits your account in the currency it receives for selling your product or service (in Non-Home currency).
- PayPal converts this currency by selling (debits) this amount in Non-Home currency.
- Finally, PayPal creates a credit transaction by buying your Home-currency in the exact amount they sold of the Non-home currency.
We offer the following steps and screenshot to illustrate an example of this process. In this example, the Home currency is GBP and the purchaser’s currency is the EUR.
- Sales transaction is for 65.98 EUR (#1 above).
- After the PayPal fee is deducted right, -2.59 EUR in this example, the remaining amount of 63.39 EUR is sold (debited #2 above).
- Subsequently, GBP currency is purchased for the exact amount = 52.32 GBP (#3 above).
The standard processing procedure of these transaction involves the calculation of a conversion rate:
52.32 GBP / 63.39 EUR = 0.82537 EUR per 1.0 GBP
The use of this conversion rate is necessary for properly recording this sale transaction in QuickBooks Online.
Now – here is how Sync to Accounting processes the same multi-currency sales transaction.
Our approach in processing multi-currency sale transaction in Sync to Accounting app is simple, our system will only process a single transaction out of the three transactions listed above, eliminating the need of calculated conversion rate.
Here is an example of the same transaction below processed by Sync to Accounting.
- Transactions #1 and #2 will be ignored. They will be categorized as “OTHER” types of transaction that should not be recorded.
- Transaction #3 will be passed to your accounting system with the exact sales amount in the home currency of your QuickBooks Online account.
Note: Sales amount converted into your Home currency will reflect the deduction of PayPal’s fees. It will be net amount.
Another note: There is no need to have separate PayPal accounts for each currency!