How to Manage Multi-Currency in Xero

If you’re in the e-commerce industry, you’ll probably be selling your products in many different markets around the world. This inevitably means conducting business in multiple different currencies. We’ll take a quick dive into how you can manage accounting for multiple currencies with Xero’s Multi-Currency feature.

Complexities in getting this right include getting the correct currency conversion rate as well as accounting for banks that have multiple currencies included within one account (PayPal we’re talking about you!).

Xero Multi-Currency

First things first you will want to ensure that you are using the Multi-Currency version of Xero. This version has a higher monthly cost compared to the standard Xero version however this allows you to record transactions in different currencies and Xero will automatically convert the amounts into your home currency.

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Multicurrency in Xero also lets you send invoices, quotes and purchase orders, as well as receive bills and payments in more than 160 currencies!  When using the platform, you should always keep in mind that foreign exchange rates from update in Xero hourly, so you should always check in daily.

Get it right from the start otherwise things will start to get messy really quickly.

Xero will also automatically calculate the gain/loss on currency which makes producing profit and loss reports and balance sheets so much more straightforward.

Multi-Currency Bank Feeds

Once you have the multi-currency option triggered in Xero you want to set up a bank feed for each account in each currency. When you set up the bank feed you will be presented with the option to select the currency the bank operates in.

Xero will then pull the transactions in the bank feed like normal. Once they are reconciled the amounts will be converted to your home currency.


Understanding exchange rates and how they impact your accounts

As an e-commerce accountant, it’s important to understand the impact of exchange rates on your accounts. Exchange rates are the value of one currency in relation to another, and they are constantly changing. These fluctuations can have a significant impact on your financial accounts, especially if you’re conducting business in multiple currencies. To better understand how exchange rates impact your accounts, it’s important to track them and consider their effect on both your income and expenses.

For example, if you receive payments in a foreign currency, a sudden change in the exchange rate could either increase or decrease the value of those payments when converted to your home currency. Similarly, if you have expenses in a foreign currency, changes in the exchange rate can affect the cost of those expenses.

By staying informed about exchange rates and how they impact your accounts, you can make more informed decisions and ensure the accuracy of your financial records.

Best practices for managing multi-currency in Xero

As an e-commerce accountant, it’s essential to have a solid plan in place for managing multi-currency transactions in Xero. Here are some best practises to consider:

  • Regularly update exchange rates: Regularly updating exchange rates in Xero ensures that your financial reports accurately reflect the current values of your foreign currency transactions.
  • Reconcile multi-currency accounts regularly: Regular reconciliation of multi-currency accounts helps you identify and resolve any discrepancies, keeping your financial records accurate.
  • Track currency fluctuations: Tracking currency fluctuations can help you anticipate any potential impacts on your business and take appropriate action if needed.



PayPal is slightly more complex. The reason for this is because you have one PayPal account but within that account you could have balances of multiple currencies. This causes a problem because in Xero each account can only have 1 currency. For example, if you have a GBP PayPal account then any transaction in a different currency would not be pulled in – this could mean you end up failing to record loads of foreign currency transactions in Xero.

The way to fix this is to set up a PayPal account for each currency you hold a PayPal balance for eg. USD, GBP, EUR. Then Xero will pull in the transactions for that particular currency.


How do I pay an invoice in different currency in Xero?

Paying an invoice in Xero is relatively quick and easy. Simply select the currency you want and the invoice will update accordingly. If the currency you are looking for is not available, simply select “add currency” and edit the exchange rate.

How do you reconcile foreign currency in Xero? 

As we mentioned above, it’s important that you reconcile foreign currency in Xero as frequently as possible. To do this you should:

  • Find the transaction
  • Select the foreign currency invoice or bill you’ve entered in Xero
  • Click Reconcile.


Technology is continuing to advance at an unprecedented rate, in all corners of the globe. With this in mind, the digital age is more connected than ever before as businesses are constantly looking to connect and engage with other businesses on a global scale.

As a result, there is an increased demand for companies of all shapes and sizes to hold a multi-currency business account.

Consult with an expert an E-Commerce Accountant

 If you’re new to managing multi-currency transactions in Xero or have complex requirements, it may be helpful to consult with an E-commerce Accountant to ensure you have a solid plan in place.

Once you know how to set your file up to support multi-currency it really isn’t too complicated. Our key advice is to get it right from the start. Consult Unicorn Accounting!

Why choose Unicorn Accounting?

Setting up and running an eCommerce business is an exciting venture, but it is important to know all your business accounting needs are also being taken is being taken care of.

At Unicorn Accounting we are a team of experienced eCommerce accountants who can help keep your eCommerce business accounts in order. For more information, get in touch today.

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Breakout E-commerce accountants and Xero specialists to supercharge your UK online business growth.