Processing an foreign currency bill payments in Xero

Processing an foreign currency bill payments in Xero

Note: Foreign currency bill payments can only be processed if you have a Xero package that the includes multi-currency option

 

Overview

When a bill is created in Xero, via Autoentry the system provides an estimated currency exchange rate. However, this is always different to what your bank charged you.

When processing a payment of a foreign currency bill you need to manually calculate the exchange rate.

These instructions explain how to do this and how to process the payment in Xero.

Paying a foreign currency bill

If an bill is in a different currency to the bank account where it was paid from, Xero will calculate an approximate exchange rate for you.

This will be different to the rate that the bank has changed you.

As these amounts differ, Xero is unable to match the two transactions in the reconciliation screen. You will need to manually adjust the exchange rate on the bill

Once a bill has been created via Autoentry and the payment has appeared on your bank feed, do the following:

  1. On the reconciliation screen, make a note of the payment amount on the bank feed.
  2. Locate and open the bill (Accounts -> Purchases)
    1. Scroll down to the Receive a Payment  section
    2. When you select a base currency bank account from the Paid From drop down the Exchange Rate field.
    3. You will need to manually calculate the actual exchange rate that your bank charged you (see below)
    4. Enter the calculated exchange rate in the Exchange Rate field
    5. Complete the other payment fields
    6. Click Add Payment
  3. Return to the reconciliation screen.There should now be a match for the item on the bank feed.

Calculating an exchange rate

To calculate the actual exchange rate charged by your bank you will require the following:

  • The amount shown on the bill (the foreign currency)
  • The amount charged by the bank – see your bank feed

Divide the bill amount (the foreign currency) by the amount deducted by the bank

For example,

  • Bill amount = US $132.00
  • Amount charged by bank = A $181.92
  • Exchange rate = $132.00 / $181.92 = $0.72559

Processing a foreign currency bill payment in Xero

 

 

 

 

 

 

 

 

 

More information

If you need more help with a foreign currency bill payment get stuck or need us to go through this process with you, let us know.

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