One of the toughest nuts for any software provider to successfully crack is multi-currency handling. I know for instance that FreeAgent has been noodling around this topic for ages and the folks are still doing a certain amount of head scratching. Xero has come up with a solution that looks elegant yet maintains the notions of simplicity that have driven its design from the get go.
I asked whether it would automagically handle billings in one currency, payments in another AND the all important reconciliation. The solution isn’t 100% there but it is pretty close. This is what Hamish Edwards told me in an email enquiry:
“With the new bank reconciliation functionality released today, Xero handles the following scenarios:
1. NZ Company, NZD base currency, GBP Bank Account, GBP Invoice and GBP Payment
From the bank reconciliation (for the GBP Bank Account), select Find & Match and apply GBP payment to GBP Invoice
2. NZ Company, NZD base currency, GBP Bank Account, NZD Invoice and GBP Payment
From the bank reconciliation (for the GBP Bank Account), select Find & Match (un tick show GBP Items only) apply GBP Payment to NZD Invoice, Xero will automatically derive the exchange rate
3. NZ Company, NZD base currency, GBP Bank Account, USD Invoice and GBP Payment
Currently you will need to perform two steps for this scenario:
· Setup a USD Bank Account (may be call it a clearing account), pay the USD Invoice in USD from the ‘USD Bank Clearing Account’, by completing the payment blue bar of the invoice Awaiting Payment.
· From the USD Bank Clearing Account, select Transfer, enter the GBP Account for ‘To Account’ enter the USD Amount and GBP Amount and Xero will derive the exchange rates. You will then be able to reconcile the GBP Amount received against the Transfer using Find & Match. If there is demand we may accommodate scenario 3 fully from the bank reconciliation in a future release.”
I don’t know whether to see this as a concern or not but as of 28th September, Xero plans to charge an extra $10/month for the multi-currency component. It is inevitable that as a service develops at least some additional services will demand a cost increment. I’m just not sure whether this is something a customer would feel comfortable paying. My guess is that removal of the inevitable aggravation of trying to sort out currency conversions alone would be enough to say ‘yes’ but I’m also guessing that some will gripe. It’s inevitable. Even so, it sends a signal to the market about what constitutes value.
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