Are you familiar with multi-currency conversions? They’re not just important to accountants, but to anyone working with inventory values and multiple countries. Let’s have a conversation about manual and automatic multi-currency conversion.
If you have vendors, customers, and/or employees in more than one country, you know that you have to deal with multiple currencies. Every currency you receive that is different than the one you use normally must be converted into your home currency for tax purposes, as well as for correctly valuing your inventory and sales. Manual multi-currency conversions must be performed by hand every time you make a business deal with an entity or person outside of your country.
Manual:
If you have vendors, customers, and/or employees in more than one country, you know that you have to deal with multiple currencies. Every currency you receive that is different than the one you use normally must be converted into your home currency for tax purposes, as well as for correctly valuing your inventory and sales. Manual multi-currency conversions must be performed by hand every time you make a business deal with an entity or person outside of your country.
Problems:
Currency exchange rates are a moving target. They change on a near-constant basis, so even if you’re very well-versed on them one day, that information could be outdated the next. Also, if a decimal point gets put in the wrong place or a number gets entered incorrectly, it could lead to all sorts of problems with your bookkeeping and inventory valuation.
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