Multi-currency accounting in Ireland: sterling, dollars and the euro books

Typing a sterling invoice in at today’s euro value seems simple, but the customer pays weeks later at a different rate. The difference has to go somewhere, and without multi-currency it usually ends up mixed into sales or bank charges. Over a year, that blurs your margins and makes the bank hard to reconcile.

The invoice is recorded in sterling, with its euro value at the rate on the invoice date. When the customer pays, the payment is recorded at the rate on the day it is received. Any difference between the two euro values is an exchange gain or loss, posted to its own account rather than to sales.

The same applies to supplier bills in a foreign currency, in reverse.

A sterling or dollar account is kept in its own currency in the books, so its balance matches the bank statement exactly. At month end, the euro value of the balance is revalued at the closing rate, and the movement shows as an unrealised gain or loss. That gives an honest euro picture without changing the account itself.

Your VAT return is in euro, so any VAT on a foreign-currency transaction must be converted. Sales of services to UK businesses are often outside the scope of Irish VAT, while sales of goods to Britain are exports; both need the right tax treatment as well as the right rate. Check treatment with your accountant when you start trading with a new country.

Use a consistent, reputable rate source and apply it the same way every time. Most accounting software fetches daily rates automatically, which removes both the effort and the temptation to round. If you buy currency at a specific rate, for example through a broker, record that actual rate for the transaction, since it reflects the euro you really paid.

These are the patterns accountants see most often.

• Recording a sterling receipt in euro at a guessed rate.
• Treating exchange differences as sales or bank charges.
• Keeping a foreign bank account in the books in euro, so it never matches its statement.
• Forgetting that card payments in dollars carry a conversion fee.

An Irish design studio invoices a London client £5,000 on 1 March, when one pound is worth €1.17. The invoice is recorded as £5,000 with a euro value of €5,850. The client pays on 31 March, when the rate has moved to €1.15, so the £5,000 arrives as €5,750.

The invoice is cleared in full in sterling, and the €100 difference is posted as an exchange loss. Sales stay at €5,850, which is what the studio actually agreed to charge, and the currency movement is visible on its own line where the owner can see it. The rates here are illustrative.

If the studio held a sterling account and left the payment in pounds, the account would show £5,000 and its euro value would be revalued at month end instead.

HelloBooks includes multi-currency on the Pro plan, with automatic exchange rates, separate gains and losses, and foreign bank accounts kept in their own currency. Euro remains the functional currency and VAT3 figures stay in euro. Bank activity can be brought in by statement upload today, with direct Irish connections rolling out.