How should foreign-currency invoices be recorded?
Each document should be recorded at the exchange rate of its own date, not at today’s rate. Converting everything at the current rate rewrites the past every morning: last quarter’s profit changes overnight and nothing reconciles. The difference between the rate on the invoice and the rate on the day the money arrives is a realised FX gain or loss — a real result that belongs on its own line, not absorbed into revenue.
The problem with “convert everything today”
It is tempting because it is simple, and it quietly destroys comparability:
- Last month’s profit changes every morning.
- A payout reconciliation never matches, because the bank used the real rate.
- Two reports run a week apart disagree, and neither is wrong.
What to store
| Field | Why |
|---|---|
| Document currency | What the customer actually owes |
| Document amount | Unchanged forever |
| Rate on document date | Fixes the base-currency value |
| Rate on settlement date | Produces the FX difference |
With those four, every later question is answerable and no past number moves.
FX difference is a result, not noise
For a cross-border seller it can be material. An invoice for €10,000 issued at 1.0712 and paid at 1.0842 is a $130 difference — on one invoice. Across a quarter it is a line worth seeing rather than a rounding absorbed into sales.
Checklist
- Does every document store its own currency and rate?
- Do past documents keep their original rate?
- Are realised FX differences reported as their own line?
- Is the reporting currency a display setting, not a stored conversion?
Frequently asked questions
Which exchange rate should an invoice use?
The rate of the invoice date. It should not change afterwards, so a closed period stays closed.
What is a realised FX difference?
The gap between the rate when the document was issued and the rate when the payment was received or made. It is a real gain or loss and is reported separately.
Can I report in a different currency than I invoice in?
Yes. Documents keep their own currency and rate; the reporting currency is a display choice applied on top.