Foreign currency orders

This article explains how foreign currency orders are handled when multi-currency is switched on.

Sales and purchase orders and credits are always created in the customer or vendor currency and all items then added to the order will be priced in that currency.

Even if the price list used on the order indicates a different currency, the order currency always takes precedence.

Warning: If an item is added from a price list of a different currency, its price will not be converted - the currency is simply changed. For example, when creating a USD order a product added using a Euros price list where it is priced of EUR10.00 will be priced at USD10.00.

The currency of the order or credit is used for all of the following:

  • Invoice
  • Payments
  • Customer or vendor account balance
  • Invoice and payment accounting (uses both foreign transaction and base values)

The currency of the order is not applicable when handling stock. All inventory values associated with the order are managed in base currency.

Changing the currency of an order

It is not possible to change the currency of an order after it has been created.

However, the contact currency can be changed, and a new order can be created in the desired currency. It is fine for a single customer or vendor to have orders and invoices in multiple different currencies.

Exchange rates on purchase orders, invoices & payments

The order exchange rate is used to provide an estimate of the total base currency value, but it is not necessarily the final rate that will be used for the invoice or payments, which depend on various rules and settings.

Order exchange rate

When a foreign currency order is created, it will be assigned the system exchange rate for the order tax date, which will usually be the day the order is added unless it is set by an app submitting the order.

Manually changing the tax date on an order doesn't cause the exchange to change, but the rate can be manually edited to recalculate the estimated base value of the order.

Fixed and not fixed exchange rates

The exchange rate on each order can be marked as fixed or not fixed.

When manually adding orders, the rate defaults to not fixed. The option can easily be changed using the "Fix" checkbox next to the exchange rate within each order. It is not possible to edit this in batch.

It is important to understand the difference between a fixed and not fixed exchange rate and the effect it will have on the final invoice and any payments that are processed against the order.

In summary, fixing a rate means the rate seen on the order is used for both invoice and payments, and a not fixed rate will be set by the system for the invoice and payments:

  • When an exchange rate is fixed, the rate is locked into the order. This same rate will be used for the invoice and all payments processed against the order. Since the same rate is used, no exchange rate gains or losses will be produced as a result of these transactions.
  • When an exchange rate is not fixed, the rate used for the invoice will be the system rate applicable for the invoice tax date (note that accounting settings control whether this date is updated on invoicing). This means that the order rate will be overwritten at the time of invoicing. In addition, any payments processed against the order will also use the system exchange rate applicable for the payment date, unless manually edited.
    Since different exchange rates can therefore be applied to the invoice and payments, it is likely that exchange rate gains and losses will be recognized for these orders.
    This will usually be the case when receiving an invoice from a vendor but making a payment later, or issuing an invoice to a customer who has credit terms, since exchange rates will change over time.

If you are unsure as to whether you should be changing the fixed exchange rate option on an order, you should check with your accountant.

Invoice exchange rate

When an order is invoiced the exchange rate used depends on whether the order rate is fixed or not fixed:

  • If the exchange rate is fixed, the rate seen on the order will be used for the invoice. Unless the rate has been manually entered, the rate will usually be the the rate from the date the order was created. 
  • If the exchange rate is not fixed, the system exchange rate for the invoice tax date will be used. The invoice tax date used depends on an accounting setting "Use today's date as invoice date" found at Settings > Company > Accounting: Options. If this is set to yes, the order tax date will be overwritten with today's date and therefore the exchange rate for today will be used. If this is set to no, then the tax date won’t be updated - the order tax date will be used and the exchange rate from that date, which may be a past date.

Payment exchange rate

Payments are always processed in the order currency. The exchange rate used to convert the payment to base currency depends on whether the order rate is fixed or not fixed:

  • If the exchange rate is fixed, the rate seen on the order will also be used for the payment.
  • If the exchange rate is not fixed, the system exchange rate for the payment date will be used by default, but this can also be manually entered is required.
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