Working With Foreign Currency Bank Accounts

Once you establish a relationship with a vendor or customer that uses a different currency, you should consider how you will compare prices between the two currencies. Unless you open a foreign currency bank account, you will likely have to convert from one currency to the other every time you buy or sell goods. Not only does this process take time, but it also exposes you to unexpected jumps in currency exchange rates. Plus, you must also pay exchange fees and wire transfer fees when you pay with your home currency bank account.

Opening a foreign currency bank account simplifies your transactions with foreign vendors and customers by working in that one specific currency.

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When you receive an invoice from a foreign vendor, you can pay them the exact price written on the invoice. And because the bank account from which you pay the invoice is always the same currency, you do not pay for conversion, the exchange rate never fluctuates, and you can write a cheque from your account instead of having to transfer funds or buy a money order.

We recommend that you set up a foreign currency account for each of the currencies you use. If you perform many transactions with both foreign vendors and customers, it might be useful to keep one account for making foreign purchases and another for making foreign sales.

Note: You could also choose to open a bank account in a foreign country, but you often need to be a citizen or at least resident of the country to do so. Also, most countries have regulations on holding foreign accounts. Check with your local tax authorities for details.

To add a foreign currency bank account:

If your data is already configured to use foreign currencies, you can add a foreign currency bank account and follow the rest of the steps for configuring your inventory items and services, customers, and vendors.

If you have not yet set up foreign currencies, you should start here.