International payments and FX Gain/Loss

Routable uses multi-currency sync and base currency sync in order to properly record bills and bill payments in your accounting software. It’s important to understand the differences between the two and the best practices for handling foreign exchange (FX) gain/loss.

Multi-currency Sync

Multi-currency accounting is transacting in two or more different currencies. In Routable, multi-currency sync is enabled to properly record bills and payments in the foreign currency. The accounting software will handle any differences in gain/loss automatically.

1. When you create a bill on Routable, we will sync our FX rate to the accounting software at the time of bill entry.

2. At the time of payment, if the FX rate is different, the bill payment will be recorded in Routable with the updated exchange rate.

3. Then, the difference between the bill and bill payment will be posted to the ledger as FX gain/loss automatically by your accounting software.

4. If the payment is canceled, the accounting software will automatically remove the FX gain/loss entry.

Example

An international payment of 100 EUR is sent for a marketing expense. At the time of bill entry, the FX rate is 1.2. At the time of bill payment, the FX rate is 1.3.

Base currency sync

Routable uses base currency sync to properly record foreign currency bills and bill payments in a single base currency. Currently, Routable only supports USD base currency.

1. When you create a bill on Routable, Routable will sync the bill in the base currency, but will pay in the local currency. Routable will note the FX rate at the time of bill entry.

2. At the time of payment, Routable will pay the bill with the updated FX rate, but post the bill payment with the bill FX rate to mark the bill as fully paid.

3. If there is a difference in the FX rate from the bill entry to the bill payment, Routable will be able to book the FX gain/loss to your preferred GL account

   1. ⭐️ Note: in order for Routable to create the FX gain/loss entry, you must provide the designated GL account.

   2. ⭐️ Note: the GL account cannot be a system account, so it must allow manual journal entries. Please reach out to Routable Support or your Customer Success manager to set this up. If you do not prefer Routable to make this entry, you will have to create the entry manually.

4. If the payment is canceled, Routable will reverse the FX gain/loss entry automatically.

5. If a payment fails, Routable will only post the FX gain/loss entry when the payment is successful.

Example

A client is sending an international payment of 100 EUR for a marketing expense but wants to sync in their base currency in their accounting software. At the time of bill entry, the FX rate is 1.2. At the time of bill payment, the FX rate is 1.3.