One of the features of Clarity Accounting is the robust multi-currency support it has for small businesses and professionals who do business internationally.  We are already seeing many clients living in places such as Thailand and Japan while doing business over the Internet with companies in North America and Europe.

This help file is designed to provide instructions on how to utilize the multi-currency feature inside our accounting software.

Entering Multi-Currency Expenses / Bills

Case Study

For the purpose of this example, Clarity Accounting is a US based business with US dollar as its primary currency.

Clarity Accounting has contracted Habitsoft - a Canadian graphic design firm to upgrade the look of its website.  Habitsoft, Inc has done 60 hours of work at $100 CDN / hour for a total invoiced amount of $6000 CDN.  Since Habitsoft, Inc is a Canadian company, they are requesting to be paid in Canadian dollars.  An invoice was sent to Clarity Accounting on October 1, 2008 from Habitsoft, Inc with a 30 day term (payment to be received within 30 days).

1. To enter expenses or bills in another currency, sign in to your Clarity Accounting Dashboard and click on the “Enter Bill” tab under the Expense section.
   
2. By entering a bill with its exchange rate on the date you have received the invoice, an account payable has been created and will be tracked within the accounting software.
3. On October 30, 2008, Clarity Accounting decided to proceed with payment to Habitsoft for $6000 CDN.
   This couldn’t have been a better time for Clarity Accounting to pay Habitsoft because in the 30 days from October 1, 2008 to October 30, 2008, the Canadian dollar had suffered an unprecedented drop in value against the US greenback.
4. Please ensure that when you are paying a bill in a currency other than your primary currency, you will need to select the “Vendor” name as well as “Currency” of the original invoice in order for outstanding payments to appear on the “Pay Bill” page.
5. The reason why it is so important to enter the correct exchange rates when entering a bill and when entering a bill payment is that our accounting software will automatically calculate the “Gain or Loss on Exchange” for you - which is something you can use to file your taxes at the end of the year.
6. To view the Gain / Loss on Exchange, you will have to go to the “Profit and Loss” link under the “Reports” section on your left navigation bar.
7. You can see the precise details of the “Gain / Loss on Exchange” by clicking on the link in the Profit and Loss section:

As you can see in this example, by paying Habitsoft 30 days later in a turbulent economic month, Clarity Accounting made $742.35 of gain on exchange!!

Entering Multi-Currency Income

This feature is used when receiving income or sending invoices in a different currency other than the default currency.

1. To get to the multi-currency function of the Income section, please ensure you select the “Enter Invoice” option.  See below:

   

2. When entering the payment, please use the “Enter Payment” tab and select the “Customer” and the “Currency” of the original invoice.
   

Similar to the enter multi-currency expenses and bills instructions listed above, the “Gain / Loss on Exchange” can be viewed in the “Profit and Loss” section.