“$” isn’t a currency: foreign-currency supplier invoices in Xero and QuickBooks

An invoice for “$4,800.00” from an overseas supplier looks complete. It isn't. US, Australian, New Zealand, Canadian, Singapore and Hong Kong dollars all use the same sign, and so do several other currencies. “kr” could be Swedish, Norwegian, Danish or Icelandic krona. If the invoice doesn't print a currency code, someone has to decide which currency it is, and the usual default is your own.

What goes wrong

• The payable is wrong. USD 4,800 entered as AUD 4,800 understates what you owe by whatever the exchange rate says.
• The payment is wrong. Pay from the bill and the supplier receives the wrong amount, and you get a statement showing the balance still due.
• The tax is wrong. Any tax you reclaim is calculated from the bill, so a currency error becomes a tax error.
• The exchange gain or loss is wrong. When the currency is corrected later, the difference lands in your foreign exchange account instead of the cost of the purchase.

How to tell which currency it is

1. A currency code on the invoice. USD, AUD, NZD, CAD and so on, often near the total or in the payment details.
2. The bank details. An IBAN starts with a country code. A US routing number, a UK sort code and an Australian BSB each point to a country, and usually a currency.
3. The purchase order. If you ordered in a currency, the invoice should be in the same one.
4. Past invoices from the supplier. A supplier that has always billed in USD probably still does.
5. Ask. If none of these settle it, a one-line email to the supplier does. Ask them to print the currency code on future invoices.

The supplier's address alone isn't enough: plenty of suppliers bill in a currency other than their own.

Tax on foreign-currency invoices

For UK VAT, amounts must always be expressed in sterling. HMRC allows the UK market selling rate at the time of supply, its own period rates, or an approved commercial rate (VAT Notice 700, paragraph 7.6, HMRC). Other countries have their own rules on which exchange rate to use for tax. Check yours, and use one method consistently.

In Xero and QuickBooks Online

• Xero bills carry a currency code (Xero Developer). Foreign-currency bills depend on multicurrency, which depends on your Xero plan, so check yours before the first one arrives.
• QuickBooks Online needs multicurrency turned on for a bill in another currency. Once on, it can't be turned off and the home currency is fixed (Intuit).

How Tenet handles it

Tenet reads the currency printed on each invoice. When an invoice names no single currency, showing only “$” or “kr” for example, Tenet uses your workspace's currency and holds the invoice until a person checks the currency against the document and saves it. Approved bills go to Xero in the invoice's currency. A foreign-currency invoice for a QuickBooks company that works only in its home currency is held with a message to turn on multicurrency, never posted as if it were in the home currency. Supplier spend in different currencies is shown per currency and never added together.