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.
2) Being paid in a converted currency from Amazon
In this scenario you will select a special 'clearing' account for your CAD deposits from Amazon. 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.