Expenses in foreign currency

Management of foreign currency transactions with Expenses

Overview

While running their business, your customer might purchase stock for their small business from a foreign supplier online, paying them in the supplier's local currency.

Alternatively, they might travel abroad on business, carrying a card linked to a bank account in their home currency. When they spend money at a local merchant, they incur a business expense.

These scenarios result in multi-currency transactions, or transactions where one or more foreign currencies are involved.

Whether you provide a separate bank account for each currency or convert the amount back to the currency of your customer's bank account, you can syncSync The process of fetching the latest data from a connected data source. Syncs can be triggered manually or run automatically on a schedule. these transactions to your SMBSMB The primary customer segment that Codat helps businesses serve, typically companies with annual revenues under $500 million.'s accounting software with Expenses.

Currency variables

For multi-currency transactions, you have to consider the following variables:

• The base currency of the business and its expense account in its accounting software
• The currency of the bank account used to perform the transaction
• The currency of the expense transaction itself

Certain combinations of the above may not be supported by the accounting software your customer uses or not relevant for a specific transaction type. We will go through this in detail in subsequent sections.

Expenses includes built-in validations against such scenarios for every platform we support. Your customer's multi-currency transactions will be checked to ensure the transaction syncSync The process of fetching the latest data from a connected data source. Syncs can be triggered manually or run automatically on a schedule. is successful.

Tips and traps

• When the transaction or card currency differ from the companyCompany In Codat, a company represents your customer's business entity. Companies can have multiple connections to different data sources.'s base currency, you must specify the exchange rate to be used to convert the amount in the currencyRate field. It's mandatory to express transactions in the base currency for accounting and reporting purposes.

• It is not possible to perform currency conversion when two or more non-base currencies participate in the transaction. For example, if a companyCompany In Codat, a company represents your customer's business entity. Companies can have multiple connections to different data sources.'s base currency is USD and the transaction currency is GBP, then the bank account used must be in USD or GBP.

Payments

Payments are a transaction type that represents regular spend taking place on an account. You can read more about transaction types used in Expenses.

In multi-currency scenarios, there are five possible combinations of currencies that participate in a payment. We used an example set of currencies in the table below, and your currency set may differ based on your use case and client base.

Currency variables	Option 1	Option 2	Option 3	Option 4	Option 5
Base and expense account	GBP	GBP	GBP	GBP	GBP
Bank account	GBP	USD	USD	GBP	USD
Transaction	GBP	USD	GBP	USD	EUR

Foreign currency in Xero

When recording transactions in foreign currency, Xero does not take transaction currency into account. As a result, some of the currency combinations outlined above become redundant.

We validate the multi-currency transactions you write to Expenses to ensure the currency combination will be accepted by the target accounting software as a valid expense.

Integration	Card type	Option 1	Option 2	Option 3	Option 4	Option 5
Dynamics		✔️	✔️	❌	❌	❌
NetSuite	Credit	✔️	❌	❌	✔️	❌
	Prepaid	✔️	✔️	❌	✔️	❌
Sage Intacct		✔️	❌	❌	✔️	❌
QuickBooks Online	Credit	✔️	✔️	❌	✔️	❌
	Prepaid	✔️	✔️	❌	✔️	❌
QuickBooks Desktop	Credit	✔️	✔️	❌	✔️	❌
	Prepaid	✔️	✔️	❌	✔️	❌
Xero		✔️	✔️	Same as O2	Same as O1	Same as O2

Refunds

Refunds are a transaction type that represents any refunds and returns on an original transaction. You can read more about transaction types used in Expenses.

In multi-currency scenarios, there are five possible combinations of currencies that participate in a refund. We used an example set of currencies in the table below, and your currency set may differ based on your use case and client base.

Currency variables	Option 1	Option 2	Option 3	Option 4	Option 5
Base and expense account	GBP	GBP	GBP	GBP	GBP
Bank account	GBP	USD	USD	GBP	USD
Transaction	GBP	USD	GBP	USD	EUR

Foreign currency in Xero

When recording transactions in foreign currency, Xero does not take transaction currency into account. As a result, some of the currency combinations outlined above become redundant.

We validate the multi-currency transactions you write to Expenses to ensure the currency combination will be accepted by the target accounting software as a valid expense.

Integration	Card type	Option 1	Option 2	Option 3	Option 4	Option 5
Dynamics		✔️	✔️	❌	❌	❌
NetSuite	Credit	✔️	❌	❌	✔️	❌
	Prepaid	✔️	✔️	❌	✔️	❌
Sage Intacct		✔️	❌	❌	✔️	❌
QuickBooks Online	Credit	✔️	✔️	❌	✔️	❌
	Prepaid	✔️	✔️	❌	✔️	❌
QuickBooks Desktop	Credit	✔️	✔️	❌	✔️	❌
	Prepaid	✔️	✔️	❌	✔️	❌
Xero	Credit	✔️	✔️	Same as O2	Same as O1	Same as O2
	Prepaid	✔️	✔️	Same as O2	Same as O1	Same as O2

Transfers

A transfer is the movement of money between two bank accounts. This can be a bank withdrawal, a top-up of a debit card account, or a pay-down of a credit card account. As a result, different variables participate in the possible currency combinations: the companyCompany In Codat, a company represents your customer's business entity. Companies can have multiple connections to different data sources.'s base currency, and the currencies of the sender and receiver bank accounts.

You can read more about creating a transfer in Expenses.

In multi-currency scenarios, there are five possible combinations of currencies that participate in a transfer. We used an example set of currencies in the table below, and your currency set may differ based on your use case and client base.

Currency variables	Option 1	Option 2	Option 3	Option 4	Option 5
Base	GBP	GBP	GBP	GBP	GBP
Bank account (from)	GBP	USD	USD	GBP	USD
Bank account (to)	GBP	USD	GBP	USD	EUR

We validate the multi-currency transactions you write to Expenses to ensure the currency combination will be accepted by the target accounting software as a valid expense.

Integration	Option 1	Option 2	Option 3	Option 4	Option 5
QuickBooks Online	✔️	✔️	✔️	✔️	❌
QuickBooks Desktop	✔️	❌	❌	❌	❌
Xero	✔️	✔️	❌	❌	❌

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Read next

• API reference
• Expenses overview
• Expense transaction types