How to Record Foreign Payments in QuickBooks
A step-by-step guide for CastleFX clients receiving foreign currency from customers, holding it, and converting to their home currency. Two currency events, one clean workflow.
One-Time Setup in QuickBooks
Before using this workflow, five things need to be in place in QuickBooks Online. Castle Currency walks every client through this during onboarding.
QuickBooks Online plan requirement: Multi-currency is only available on QuickBooks Online Essentials, Plus, or Advanced. If you are on Simple Start, you will need to upgrade. Once multi-currency is enabled it cannot be turned off, so confirm your plan before proceeding.
The steps below explain each setup item in general terms, then give a specific example using a Canadian company receiving EUR. If your business operates in different currencies, the same principles apply - just substitute your foreign currency and home currency where indicated.
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Enable multi-currency in QuickBooks Online
In QuickBooks Online, go to Settings > Account and Settings > Advanced > Currency. Enable Multicurrency and confirm your home currency. This only needs to be done once and cannot be undone, so confirm your currency settings are correct before proceeding.
Our example: Home currency is CAD.
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Set up your foreign currency customer profile
In QuickBooks, create or update the customer profile for each customer who pays you in a foreign currency. Assign the correct foreign currency to that customer profile. This tells QuickBooks that all invoices for this customer are in that currency and enables multi-currency tracking on the receivable. Once a currency is assigned to a customer profile it cannot be changed, so get this right during setup.
Our example: Customer is Plane Mfg. Their currency is assigned as EUR in QuickBooks.
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Create your foreign currency bank account
In Chart of Accounts, create a new Bank account and set the currency to the foreign currency you receive. This is the account your customer payments are deposited into. The currency you assign here is what QuickBooks uses to calculate exchange gains and losses, so it needs to be correct.
When QuickBooks asks for bank routing details, it only accepts US ACH format, so foreign routing information will not validate. Use the placeholder routing details Castle Currency provides during onboarding. These are never used to move money - your actual banking details are confirmed on the CastleFX platform. The currency denomination is what drives your accounting, and that stays correct.
Our example: Bank account currency is set to EUR.
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Set up Castle Currency as a vendor in QuickBooks
Create a vendor profile in QuickBooks for Castle Currency. This is the vendor you will bill against each time you initiate a conversion. Assign the foreign currency you convert most often as the vendor currency. If you convert multiple currencies, your accountant can advise on the best setup for your situation.
Our example: Castle Currency vendor profile is set to EUR.
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Create the MCA Conversion Account
In Chart of Accounts, create a new account. Set the account type to Other Current Assets and name it MCA Conversion Account, which stands for Multi-Currency Account.
This is a clearing asset account, not an expense account. It temporarily holds the value of funds sent for conversion, sitting between your foreign currency bank account and your home currency bank account while the conversion is in progress.
Value flows in when you pay the vendor bill. Value flows out when the converted funds arrive. The account always returns to zero after each conversion is complete.
Our example: The MCA Conversion Account temporarily holds the CAD-equivalent value of EUR €10,000 while the conversion is in progress.
How It Works
There are two separate currency events in this workflow. The first happens when your customer pays you. The second happens when you convert. Understanding both is the whole game.
Event 1
Sale and collection
Your customer owes you in a foreign currency. The exchange risk sits on the receivable. This exposure ends when they pay you.
Event 2
Holding and converting foreign currency cash
You now hold foreign currency cash. The exchange risk sits on the bank balance. This exposure ends when you convert to your home currency.
Example used throughout this guide
We use a Canadian company receiving EUR as our specific example. If your business operates in different currencies, the same workflow applies.
- Customer: Plane Mfg
- Invoice amount: EUR €10,000
- Invoice date rate: 1 EUR = 1.6000 CAD
- Payment date rate: 1 EUR = 1.5800 CAD
- Conversion rate achieved: 1 EUR = 1.6100 CAD
- All rates are illustrative. Your actual rates will vary.
Invoice Plane Mfg in EUR
Create the invoice in QuickBooks for EUR €10,000. Because Plane Mfg's customer profile is set to EUR, QuickBooks issues the invoice in EUR and simultaneously records the home currency equivalent using the exchange rate on the invoice date.
What QuickBooks records
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable - Plane Mfg (EUR) | CAD $16,000 | |
| Sales Revenue | CAD $16,000 |
Revenue is initially recognized at CAD $16,000. QuickBooks also tracks that Plane Mfg owes EUR €10,000. Both are recorded from the moment the invoice is issued.
Plane Mfg pays - record the EUR receipt in QuickBooks
When Plane Mfg's EUR €10,000 arrives in your EUR account, log into QuickBooks and record the payment against the open Plane Mfg invoice, depositing to your EUR bank account. If you have an MCA Conversion Account with the CastleFX platform, Castle Currency sends you an email notification and funds are ready to convert when you want. QuickBooks closes the Plane Mfg receivable and automatically calculates the foreign exchange gain or loss based on the difference between the invoice rate and today's rate.
What QuickBooks records
| Account | Debit | Credit |
|---|---|---|
| EUR Bank Account | CAD $15,800 | |
| Foreign Exchange Loss | CAD $200 | |
| Accounts Receivable - Plane Mfg (EUR) | CAD $16,000 |
Plane Mfg's invoice is now closed. Event 1 is complete. You now hold EUR €10,000 in your EUR bank account, carried at CAD $15,800 in your books. You decide when to convert.
Enter a vendor bill in QuickBooks for the conversion
When you are ready to convert, create a vendor bill in QuickBooks for EUR €10,000 against the Castle Currency vendor profile. Code the bill to the MCA Conversion Account (your clearing asset account). Do not code it to an expense account. This is a temporary holding entry, not a cost.
What QuickBooks records
| Account | Debit | Credit |
|---|---|---|
| MCA Conversion Account | CAD $15,800 | |
| Accounts Payable - Castle Currency | CAD $15,800 |
The MCA Conversion Account now holds CAD $15,800 - the value being sent for conversion. Think of it as a temporary bucket that will zero out when the CAD lands.
Import the vendor bill into CastleFX and execute the conversion
Log into the CastleFX platform. Import the vendor bill you just created in QuickBooks. Review the rate and execute the conversion. This is the actual currency conversion - EUR €10,000 is sent to Castle Currency in exchange for CAD at the rate you see on the platform.
What QuickBooks records (bill payment from EUR bank)
| Account | Debit | Credit |
|---|---|---|
| Accounts Payable - Castle Currency | CAD $15,800 | |
| EUR Bank Account | CAD $15,800 |
Your EUR bank account is now at zero. The Accounts Payable to Castle Currency is cleared. The MCA Conversion Account still holds CAD $15,800 - waiting for the CAD to arrive.
CastleFX posts the CAD back - QuickBooks closes automatically
This step is automatic. You do nothing.
Once the conversion settles, the CastleFX platform automatically posts the CAD deposit back to QuickBooks with the actual rate achieved. QuickBooks deposits CAD $16,100 to your CAD bank account, clears the MCA Conversion Account, and posts the foreign exchange gain or loss on the difference.
What QuickBooks records (posted automatically by CastleFX)
| Account | Debit | Credit |
|---|---|---|
| CAD Bank Account | CAD $16,100 | |
| MCA Conversion Account | CAD $15,800 | |
| Foreign Exchange Gain | CAD $300 |
The clearing account is now at zero. The workflow is complete. No manual journal entries. No chasing exchange rates after the fact.
Final position
| Account | Balance |
|---|---|
| Accounts Receivable - Plane Mfg | $0 |
| EUR Bank Account | $0 |
| MCA Conversion Account | $0 |
| Accounts Payable - Castle Currency | $0 |
| CAD Bank Account | CAD $16,100 |
| Sales Revenue | CAD $16,000 |
| Net FX Gain | CAD $100 |
You invoiced EUR €10,000 and received CAD $16,100. Your income statement shows CAD $16,000 revenue plus a CAD $100 net foreign exchange gain. That is CAD $16,100 total - which ties exactly to the cash in your bank. Currency moved against you between the invoice and the payment, then in your favour between the payment and the conversion. Both movements are normal, and both are captured automatically.
See It in Action
Watch a short walkthrough of the full receivables workflow so you know exactly what to expect.
Want a Printable Version?
Download this guide as a PDF to share with your accounting team or keep on hand during setup.
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