Running multi-currency books in QuickBooks, Xero, or Zoho: what each one handles

If your US company invoices customers in euros, pays contractors in rupees, or holds money in a foreign currency account, your books have to record those transactions in US dollars without losing track of the original amounts.

QuickBooks Online, Xero, and Zoho Books all support multi-currency accounting, but none of them includes it on every plan. QuickBooks offers it from the Essentials plan up and cannot switch it off once it is enabled. Xero includes it only on its top US plan, Established. Zoho Books includes it from the Professional plan up. All three convert foreign transactions into your home currency and record exchange gains and losses, but they differ in how they handle period-end revaluation and in what else changes when the feature is turned on.

Multi-currency accounting does two separate jobs

The first job is conversion. Each foreign currency transaction is recorded at the exchange rate on the date it happened, so a €10,000 invoice becomes a dollar amount in your revenue and receivables.

The second job is tracking the gain or loss when rates move. This happens in two ways.

• Realized gains and losses. When the customer pays that invoice weeks later at a different rate, the difference between the invoice-date value and the payment-date value is a realized exchange gain or loss on your profit and loss statement.
• Unrealized gains and losses. At the end of a period, balances that are still open in a foreign currency, such as unpaid invoices, unpaid bills, foreign currency bank balances, and loans, are revalued at the closing rate. The change is recorded as an unrealized gain or loss, even though no cash has moved.

Under US GAAP, only monetary items are revalued this way. Cash, receivables, payables, and loans are revalued each period. Fixed assets, prepaid expenses, and equity stay at the rate on the date they were recorded. For almost every US company, the home currency, and the currency of its financial statements and federal tax return, is the US dollar.

QuickBooks Online: available from Essentials, and permanent once on

• Plan availability. Multicurrency is available on QuickBooks Online Essentials, Plus, and Advanced. It is not available on Simple Start.
• No way back. Once multicurrency is turned on, it cannot be turned off, and your home currency is locked. Test it in a sandbox company file first if you are unsure.
• Features that stop working. Turning it on deactivates the cash flow planner. QuickBooks Bill Pay and QuickBooks Payments are not compatible with multicurrency.
• One currency per contact. Each customer and vendor is assigned a single currency. If you bill the same client in two currencies, you need two customer records.
• Gains and losses. QuickBooks records realized gains and losses automatically when a foreign currency invoice or bill is paid. Unrealized gains and losses on open balances are handled through home currency adjustments at period-end.

QuickBooks works well for companies with a few foreign customers or vendors. The permanence of the setting is the main reason to plan before you enable it.

Xero: multi-currency sits on the Established plan only

• Plan availability. In the US, multi-currency is included only on the Established plan. The Early and Growing plans do not have it, so adding a single foreign currency account means upgrading.
• Currency coverage. Xero supports transactions in more than 160 currencies and pulls exchange rates automatically.
• Foreign currency bank accounts. You can add bank accounts held in other currencies and reconcile them against their own statements.
• Gains and losses. Realized gains and losses are recorded when payments are applied. Xero calculates unrealized gains and losses on open balances in its reports, and a revaluation can be posted to lock those figures into the period.

Xero is a strong fit when foreign currency is a regular part of the business, such as a company with customers in several countries or a US subsidiary that settles balances with a foreign parent. The cost is the upgrade to Established, which matters if foreign currency is a small part of your activity.

Zoho Books: available from Professional, with manual period-end adjustments

• Plan availability. In the US edition, multi-currency starts on the Professional plan. The Free and Standard plans do not include it.
• Currencies per contact. Customers and vendors are assigned a currency. Higher plans let one customer or vendor transact in more than one currency.
• Exchange rates. Rates can be entered manually or pulled automatically through exchange rate feeds.
• Gains and losses. Zoho Books posts realized gains and losses to an Exchange Gain or Loss account when a payment is recorded at a different rate from the original transaction.
• Period-end revaluation. Unrealized gains and losses are recorded through base currency adjustments. You select a currency, enter the new rate, and Zoho Books revalues the open transactions in that currency and shows the gain or loss before you post it.

Zoho Books makes multi-currency available at a lower plan tier than Xero. Its period-end revaluation is a manual step, so it has to be built into the monthly close rather than assumed.

The software converts currencies, but the close still has to check them

Multi-currency features handle the arithmetic. They do not catch the errors that come from how money actually moves between accounts. These are the areas that need review each month.

• Rate source. The rate your software applies may differ from the rate your bank or payment platform actually used. The gap shows up as an exchange difference that has to be explained or adjusted.
• Fees inside conversions. Banks and transfer services often build their fee into the exchange rate. Without a review, the fee is recorded as an exchange loss instead of a bank charge.
• Payment processors that convert before payout. Stripe, PayPal, and similar platforms can convert foreign currency sales to dollars before paying out. The sale, the conversion, and the payout need to be recorded so revenue reflects what the customer paid.
• Intercompany balances. If your company owes or is owed money by a foreign parent or subsidiary in another currency, that balance is revalued each period and has to agree with the other entity's books.
• Foreign currency accounts in payment platforms. Balances held in platforms like Wise or Payoneer are bank accounts for accounting purposes. They need their own reconciliation and period-end revaluation.

Inkle keeps your books on the ledger you already use

Inkle now does bookkeeping on the software your company already uses, so you do not have to migrate your books to work with us.

If you keep your books in Inkle Books, the software is free and bookkeeping is $49 per 30 transactions. If your books stay in QuickBooks, Xero, Zoho Books, or Mercury Books, bookkeeping is $79 per 30 transactions. Either way, our team reconciles and closes your books every month in the ledger you choose.

The bottom line

Multi-currency support is a plan decision before it is an accounting decision. Check which tier of your software includes it, and in QuickBooks, decide before you turn it on because the choice is permanent. Once it is enabled, the software records conversions and realized gains, but unrealized revaluation, fees hidden in exchange rates, and processor conversions still depend on a monthly close that looks for them. A company with occasional foreign transactions can run well on any of the three. A company where foreign currency is routine should choose based on how revaluation and multi-currency contacts work, not only on the subscription price.

Frequently asked questions

Can I turn off multicurrency in QuickBooks Online?

No. Once multicurrency is enabled in QuickBooks Online, it cannot be turned off, and your home currency cannot be changed. If you are unsure whether you need it, test it in a separate company file first.

Which Xero plan includes multi-currency in the US?

Only the Established plan. The Early and Growing plans do not support foreign currency transactions or foreign currency bank accounts, so a company that needs multi-currency has to be on Established.

What is the difference between realized and unrealized exchange gains?

A realized gain or loss happens when a foreign currency invoice or bill is paid at a different rate from the one it was recorded at. An unrealized gain or loss comes from revaluing balances that are still open at the end of a period. Both appear on the profit and loss statement, but only the realized amount reflects cash that has actually changed in value.

Do I need multi-currency if payments are converted to US dollars before they reach my account?

Not always. If every account in your books holds US dollars and conversion happens before the money arrives, you can record the dollar amount received. You need multi-currency once your company holds a foreign currency balance, issues foreign currency invoices that stay open, or owes amounts in another currency.

Does a US company have to keep its books in US dollars?

For most US companies, yes. The US dollar is the home currency for financial statements, and federal tax returns are filed in US dollars. Foreign currency transactions are recorded in their original currency and converted into dollars for reporting.