We get a steady stream of requests asking if we support the multicurrency version of Xero. The multicurrency version of Xero enables you to do very limited partial multicurrency (MC) accounting.\u00a0 You can generate invoices and purchase orders plus receive bills and payments in up to multiple currencies and that is about it.\u00a0 This is useful if you are actively selling in different countries with different currencies as it means that the customer gets charged in his own familiar currency.\u00a0 It also means that you can readily reconcile payments with bank feeds in multiple currencies from Stripe, PayPal etc.\u00a0 Some plugins for Woocommerce will also enable local languages to be used in the checkout too.<\/p>\n
So Xero MC is good as far as it goes but on the downside it can only be used on accounts of type bank and not on type assets\/liability which users find very restrictive as you cannot set up clearing or tax accounts for example or for that matter a balance sheet – see more<\/a>.\u00a0 Furthermore you cannot use tracked inventory to regularly buy and sell items in different currencies which is surely meant to be one of the main benefits of it! Item prices aren’t automatically converted in foreign currency transactions so need to be manually calculated.\u00a0 This is all within the one organisation so it doesn’t permit a company with different branches in different countries and currencies to be set up.<\/p>\n Whilst Xeroom will work with the Xero MC version it will only do so in the base currency of Woocommerce matches that set in Xero.\u00a0 It will still work if this is not the case but the figures will obviously be all wrong since it will be mapping WooCommerce base currency in say USD to Xero base currency in say GBP ie no conversion takes place.<\/p>\n <\/p>\n <\/p>\n After years of trying to compete with Hyperion the company was finally purchased by Oracle around 2012.\u00a0 Prior to this in the 1990’s and 00’s I personally spent 10 years working on Oracle\u2019s own statutory consolidation software called Oracle Financial Controller (and before that FCRS) which was used by many large publicly quoted companies to prepare their figures for the stock market.\u00a0 Apart from product support and development I was involved in implementing the software for very large corporations. One typical example was Europe’s largest paper company Antalis which had almost 500 companies using many different General Ledgers at the time that we consolidated for monthly, quarterly and annual reporting to management and the stock market.\u00a0 This software used a very powerful multidimensional database engine to make light work of the manipulation and number crunching of the complex data.\u00a0 I also implemented Oracle General Ledger in Barclays Capital and other major companies where I saw the strengths and weaknesses of using the General Ledger for consolidation.<\/p>\n <\/p>\n Partial multicurrency is where a business sells or buys a part of its turnover in different currencies. It is useful to maintain a customer\u2019s or suppliers account in their own currencies to make payments easier to follow and settle but sooner or later the balance or transactions need to be converted into the home base currency of the legal entity.\u00a0 Reconciling these accounts will give rise to forex currency gains\/losses and have to be posted through a clearing account.<\/p>\n Our view is that for most small businesses this is a limited benefit in comparison to the costs. \u00a0The added complications, confusion and mistakes as well as the added direct expense not only in the higher subscription of Xero MC but also in extra bookkeeping and accounting fees to manage it are just not worth it.\u00a0 If you are doing more than a small part of your business in other countries and currencies it is best to have a separate Xero organisation for each one and for the rest simply convert the transactions in real-time as they occur into your base currency which will give the most \u201ctrue and fair\u201d view of your accounts.<\/p>\n Xero does not provide for the consolidation of multiple entities or sets of books so this will have to be handled by a spreadsheet or a dedicated consolidation tool like Hyperion.<\/p>\n <\/p>\n If you add extra currencies to your Woocommerce setup then transactions can take place in them and get stored but also are converted into your store\u2019s base currency.\u00a0 There are some plugins that will map these transactions over to Xero.\u00a0 For the reasons already discussed we think unless you are actively selling to multiple countries in different currencies with frequent transactions, it is not worth doing.<\/p>\n <\/p>\nTrue Multicurrency Accounting<\/strong><\/h2>\n
![\"\"](\"http:\/\/www.xeroom.com\/wp-content\/uploads\/2020\/06\/hyperion.jpg\")
<\/a>Large multinational groups operate their businesses in a full true multicurrency way.\u00a0 In a nutshell this is how it works.\u00a0 The group subsidiaries all maintain separate sets of books in the local currencies of the countries where they have legal entities and operations in.\u00a0 Buying and selling of goods between the group entities is handled via intercompany transfers and balances.\u00a0 Group accounts are prepared by doing a consolidation of these entities\u2019 books using a common core chart of accounts, eliminating any partial shareholdings, converting flows and balances into the parent\u2019s reporting currency at the appropriate exchange rates (average, opening, closing etc), eliminating the intercompany balances and finally making any miscellaneous adjustments to get the final figures. Balance sheet items such as property and inventory will have unrealised forex gains\/losses which can be carried whereas realised gains\/losses<\/a> get crystallised and taken into the profit and loss account.\u00a0 Once the data collection and number crunching has been done the data needs easy-to-use spreadsheet style tools to enable the standard financial reports to be run and queried by the upper management and users.\u00a0 Hyperion is perhaps the most well known software for handling management and statutory consolidation and its nice user interface has made it the market leader.<\/p>\nOur Experience<\/strong><\/h2>\n
Partial Multicurrency<\/strong><\/h2>\n
Connecting Woocommerce to Xero in Multiple Currencies<\/strong><\/h2>\n
Currency Switching \u2013 A Better Solution<\/strong><\/h2>\n
![\"\"](\"http:\/\/www.xeroom.com\/wp-content\/uploads\/2020\/06\/shop_currency_choice.jpg\")
<\/a>We think it is much better to use a currency switching widget on your shop so that you can make sales and take payments in any currency using the current live or daily updated conversion rate.\u00a0 Products are held in the base currency but the widget will convert and display them in the shop to the desired currency of the shopper at the current rate.\u00a0 When a sale occurs, it is converted into your Woocommerce base currency and these transactions can be posted as normal by Xeroom into Xero.<\/p>\n