As you will likely have noticed, your Debitoor account operates with a single base currency. This currency can’t be changed. This article explains exactly what this means, why Debitoor works in this way, and reminds you how this affects your invoicing and expense reporting.
What does ‘base currency’ mean?
The ‘base currency’ of your Debitoor account refers to the primary currency that it operates in. What base currency your account uses depends on where your business is registered. If your business is based in the UK for example, the base currency of your Debitoor account will be GBP. If your business is located in South Africa, your Debitoor account will operate in ZAR.
Which edition of Debitoor you use depends on where you say your business is located. Different editions of Debitoor use different base currencies.
Why does a Debitoor account work with a single, base currency?
When you sign up to Debitoor, you have to choose where your business is located. The base currency of your Debitoor account will then be the national currency of that country. This is because your business’ bank account should also be in the same country as the business, and that bank account will operate in that country’s national currency.
Debitoor accounts have a single base currency so that the software always works with the same currency that the user banks in. So, if your business is in the UK for example, your bank should also be in the UK. And if you’re banking in the UK, this means that the transactions in your account will always be accounted for in GBP.
Even though you may work all over the world, your bank will always operate in that country’s currency and transactions in foreign currencies will be converted accordingly. For example, if you have a UK bank account and a customer pays you 500€, this will be automatically converted into Sterling and you’ll see £451.66 has been paid into your account.
Debitoor is designed to make invoicing easy for its users. By using a single base currency, your accounting is simplified, and you benefit from features such as automatic bank reconciliation that enables invoices and expenses to be matched with bank transactions.
How can I work with other currencies?
Even though the base currency of your account is always the same, Debitoor invoicing software still allows you to work with different currencies.
Invoicing in other currencies
It’s easy to invoice your customers in foreign currencies. When creating a new invoice in Debitoor, you can change the currency in options. Simply select the currency you want from the drop-down menu. Debitoor will also provide you with an up-to-date exchange rate you can use to convert your prices accordingly.
Of course, however, as exchange rates are always fluctuating, it’s important to correctly account for your exchange gains and losses when your customer pays you. For example, suppose your UK-based business sells bikes that cost £250.00. However, you invoice a Spanish customer in Euros. The Euro price is therefore €277.53. Before your customer pays however, the value of the Euro may change, meaning that the €277.53 you’re paid may be worth more or less than £250.00. As all of your financial reports would use GBP (i.e. your account’s base currency), you would need to account for this exchange gain or loss.
Expenses in other currencies
Unlike invoices, you can only record an expense in your account’s base currency. So, even if you paid for an expense in a foreign currency, Debitoor will only allow you to record this in the base currency of your account. So, if your business is located in the UK and you paid for a hotel stay in Spain in Euros, you still need to record this expense in GBP.
To record your expenses correctly with Debitoor, you therefore need to convert expense costs into the base currency of your account before saving them.
What do I do if I want to change my base currency?
As already explained, you can’t change the base currency of your account once it’s been set up. The only way to change your base currency is to sign up to Debitoor with a new account and a different business location. However, this would only be necessary if your business location has changed countries, because, as has already been said, your base currency should match the country (and currency) that your business banks in.
If you have any problems or questions regarding your base currency and think that you’re maybe using the wrong edition of Debitoor, of course you can reach out to support who will happily assist you.