In this article we will cover how to handle multiple currencies within your QuickBooks account when Amazon pays you in a foreign currency. In this article we'll use an example of a US business selling on Amazon.com and Amazon.ca in USD and CAD respectively. The same functionality applies for businesses selling in other multi-currency scenarios such as GBP on Amazon.co.uk and EUR on Amazon.de.
When you sell on Amazon in a foreign currency there are two options for how you can have Amazon pay you.
- Amazon can pay you in the foreign currency into a bank account denominated in that currency. For example you are a US business, selling on Amazon.ca and you are paid Canadian dollars (CAD) into a CAD bank account held with your US based bank.
- Amazon can convert the foreign currency into your preferred currency (USD) and pay you to your normal bank account (USD account with US bank, in the example above).
Which option you choose for the payments from Amazon will affect how you handle the payments in QuickBooks and how you reconcile them to your bank account deposits. We'll cover both options separately below.
Before you begin
- Ensure you have the multi-currency option enabled in QuickBooks (Company settings > Advanced) and select the correct currencies that you need for the Amazon marketplaces where you sell.
- Ensure you understand which option from the two shown below you need to use - it will depend on how you have configured Amazon to pay you in Seller Central.
1) Being paid in the foreign currency from Amazon
In this scenario you will select an actual bank account for each currency payout. In A2X settings when there are multiple currencies detected, you should see a bank account selection option for each currency. Like in the picture shown below.
Choose your USD bank account for the USD payments and your CAD bank account for the CAD payments. This will ensure that in QuickBooks each payment is being properly accounted for in the bank account where Amazon is paying you.
When the Journals are sent to QuickBooks you can then 'match' them to the corresponding deposit in the bank account for that currency.
This configuration in A2X will look like this:
Now when the deposits arrive in QuickBooks you can simply match them with their corresponding journals from A2X in the normal manner.
If you transfer the foreign currency from the bank account it was paid, into your home currency account, you will need to initiate a transfer in QuickBooks and apply the correct currency rate that you paid when converting.
2) Being paid in a converted currency from Amazon
As of late 2017 QuickBooks added support for matching foreign currency journals to home currency deposits. This means that when choosing an A2X account for the deposit, you can select your home currency bank account if your Amazon deposits are being converted by Amazon and paid directly to you in your home currency. A2X will detect the exchange rate paid by Amazon and use the correct amount on the journals sent to QuickBooks.
For example here's a Canadian seller who sells on Amazon.com. The settlements are in USD, but Amazon converts them to CAD for the seller to deposit directly into their Canadian bank account.
When selecting which bank account the foreign currency is paid in to, you can select your home currency bank account, for example the GBP checking account below:
Now when the USD settlement journal is sent to QuickBooks, you can match it directly to the CAD deposit like this:
Note that you need to select the radio button 'foreign currency' when finding a match:
This saves the need for a clearing account except in special circumstances. For example if you had Amazon convert to a currency that was not your home currency, you would still use a clearing account, as described below.
A note for 2017 A2X + QuickBooks users
In late 2017 Intuit released changes to the way they support multi-currency journals and matching to them which made it easier for A2X users to match their foreign currency journals to their home currency payments. The old method of using a clearing account described below is no longer needed, but is being kept here for reference.
In the old version of QuickBooks you will select a special 'clearing' account for your CAD deposits from Amazon (In the newer version of QuickBooks you do not need to do this).
The clearing account will receive the correct amount of CAD from Amazon, and then in QuickBooks you will 'transfer' the amount from the clearing account in CAD into the USD bank account instead of directly matching the journals from A2X against the USD deposit. We do this because QuickBooks has a limitation on matching one or more journals that deposit foreign currency into a home currency bank account.
You'll need to create a clearing account to use as a 'bank account' (though it's not a real bank account - the foreign currency funds simply pass through this account), to do this add a new account in QuickBooks like this:
Then in A2X, select that clearing account in the QuickBooks settings like so:
Now when the amount arrives to your bank account in QuickBooks, you can initiate a transfer between the clearing account for the amount of CAD that Amazon deposited. QuickBooks will automatically calculate the exchange rate based on the amount of CAD you input. The exchange rate that Amazon charges is typically be 1-2% lower than the daily market rate.
You create the transfer like this:
Now the CAD funds have been converted to the USD deposit amount at the correct exchange rate provided by Amazon at the time of the transfer.
If you'd like help getting this set up, or have any questions about how it works please contact us.