Multi-currency sneak peek
Due to the interest in our upcoming multi-currency release, we decided to share this internal video of our design prototype. It’s from Philip Fierlinger, our Head of Design, and provides a view into our design process.
Please note that some of the functionality shown in this prototype will not make it into our first version.
One of the experiences that drove us to creating Xero was how bad multi-currency is implemented in common accounting products. Even in the big, well known, products multi-currency feels like a hack.
We designed the multi-currency solution we always wanted by building currency right into our core accounting engine. And just like our live bank feeds, we have automated exchange rate feeds. Our customers will be able to see their currency exposure with no effort – whenever or wherever they want.
This is a big release for us and should be out in June.
We look forward to your thoughts and questions.
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16 comments
Nice. Bring it on.
I notice the AUD A/R invoice in the demo has a NZ GST component. Could you set an option to not charge GST on invoices with foreign currency by default if you’re exporting? Or code it to an Australian GST account if you are registered for GST in multiple regions?
James – I think you’ll find that’s Aussie GST – I’d imagine that foreign currency transactions would be Xero rated fro NZ GST by default
Hi Ben, I think it is NZ GST because it is at 12.5% and Australia is at 10%. This is a NZ organisation so i’d expect it to not collect Australian or NZ GST by default when creating an AUD invoice? (unless the organisation was also registered for GST in Australia.)
The demo isn’t wrong because there would be times that you’d still have NZ GST on an AUD invoice, but for us that wouldn’t happen much.
James – you might be right. I’ve been invited to do some video interviews with the Xero team looking at the multi-currency stuff so I’ll ask the questions.
The real issue with multi-currency is allowing every edge case to be catered for – from first blush it looks like Xero have done that…
Regardless of what currency you invoice in – whether you charge GST or not is based on the location of your customer.
If they are in New Zealand (in the example) – then you’ll always charge GST in NZD regardless of the currency of the invoice. If they are out of New Zealand, you won’t charge GST regardless of the currency.
For each contact in Xero, you’ll be able to set their default currency and their default GST code so you don’t have to enter it for every invoice.
That makes sense, thanks for the explanation. Do you think Xero will one day have the ability for a NZ organisation to charge Australian GST to some customers and NZ GST to other customers if registered in both countries?
We have 2 xero organisations at the moment to cater for this (and multicurrency) but it would be so much nicer to manage if we had them in the same organisation.
Mike James
If you are buying goods in an overseas currency, then according to the IRD you must have a tax invoice in NZ Dollars. (IRD, GST on special supplies). The same will therefore apply to GST charged on sales invoices in a foreign currency to a local customer; I think a separate NZD invoice will be required for the GST component.
Chris
Maybe I missed this but I’m not too bothered about exchange rates as I have three separate bank accounts for £, €, $. Can invoices raised in these currencies relate to their own bank balances, separate from each other? It would be great to be able to monitor the three accounts from the dashboard,
Another thought on €, when invoicing in euros that Xero will ask for the EC client’s VAT number so that there is a 0% EC Sales VAT rate applied?
Thanks & looking forward to June..
@Chris – using the UK version of Xero, you can currently setup a 0% EC Sales VAT rate and set it as the default VAT code for your EC clients. You can also enter their VAT number (when editing their contact record) and it will appear on invoices.
Regarding exchange rates, you’ll still need the live rates as you will be reporting all of your sales in one currency (where-ever you pay tax) – so while you are invoicing and receiving payment in the same currency, having up-to-date FX rates means your P&L and Balance Sheet will always be accurate and you’ll be able to monitor your FX exposure at any point in time.
Thanks Andrew, will there be a way to have three different currencies maintained at the same time from one xero account, eg with tabs? It would be great to see balances/debtors etc across the three accounts.
I might not have understood you.
Brent Rollings
Looks good. I have worked with a number of companies that set their budgets at a budget exchange rate. All actual sales and expenses get posted at the budget exchange rate. Receipts and Payments are entered at spot or actual rates. FX Gains/losses are then posted to one GL account (or one per currency). This allows accurate budget v Actual reporting, pushing FX into one line in the GL rather than having it spread across all lines. Will Xero be able to set budget exchange rates by month and post transactions using the above approach?
@Brent – we won’t be updating the budget in v1 of multi-currency, but we are seeing more and more demand for extended budgeting functionality. so will take your comments into account when we re-work our budgeting. I’d be keen to get some more info from you, could you email me on andrew@xero.com so we can talk further.
Hank
Very impressive. Good to see you’ve covered some fairly unusual edge cases. I look forward to this release!
@Hank – normally edge cases are strictly forbidden from our design/dev process, particularly for v1 of a feature. However, this is one case where it would have required more work to avoid the edge cases.
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This looks really awesome guys looking forward to ditching my current manual PDF generation ‘solution’.