I posted awhile ago when Xero rolled out multi-currency so it’s only fair to do a wrap up of the latest multi-currency entries. Both FreshBooks and FreeAgentCentral announced this month the availability of their multi currency functionality.
The FreeAgent offering is really slick, including on the fly calculation of daily unrealized and realized gains and losses on these invoices between the date of the invoice and the date customer payment is received. Like Xero, FreeAgent have opted to use the forex codes from XE.com – as the biggest exchange rate publisher – this makes sense.
FreshBooks has done a nice job of multicurrency also, their rates are populated from the Bank of Canada but their approach isn’t dynamic, rather it averages exchange rate data over a period of time. They don’t have an intro video but have written a FAQ page for more details. Interestingly, with FreshBooks if you have invoiced someone in a currency that is different from your default currency, then you can only enable online payments if you are using PayPal.
The FreshBooks approach is to mainly separate reporting by currency. While this makes life easier for them, it does make it harder for a business to get a really clear picture of their position – however at least P&L and tax show aggregate figures.
It seems the FreshBooks announcement came a little out of the blue, if this post is anything to go by.
All in all it’s interesting to see that multi currency is becoming almost a non-negotiable requirement, even for the smaller end of the SMB market – yet another feature that all vendors need to plan for…
Multicurrency is a fundamental part of an accounting system. It seems the numerous small cloud players entering this space are already on the back foot with this. For example:
– Calculating gains/losses on the payable line only considers the balance sheet rather than providing revaluation capability for the income statement.
– Posting and calculating realised and unrealised currency gain/loss on a daily basis would lead to clutter in the GL and could obscure rather than help.
– Using the currency master to calculate unrealised values can cause problems.
Our multicurrency functionality has been born out of decades of heavy duty international accounting experience. See a longer response at http://blog.financialforce.com
Hey Ben – thanks for the mention. Couple things about our approach to multicurrency here at FreshBooks I thought I’d expand upon.
First up, we use the average exchange rate from yesterday. We figure an average is better than some more volatile amount right *this second*. When you run your profit and loss, we don’t use today’s rates because we offer an historical account of your billings – not a live look at your bank account. In this situation, we offer an average exchange rate over the period of time you are looking at.
For example, if you are looking at your 2008 Profit and Loss, we give you an average exchange rate of 2008, not today’s currency. In fact, each month’s column in the P&L is calculated using that month’s average exchange rate. Why? Well…again these are historical accounts…if you want to know what your receivables were worth in 2008, it makes more sense to have an average of that year, rather than today’s rate.
With respect to “separate reporting by currency”, that is exactly right. FreshBooks’ mission is to GET YOU PAID. We are the leader in billing and bookkeeping, and for those businesses who need a full blown accounting (of which there are many) then we make certain you get the accurate untransformed data out of FreshBooks so that your accounting system can do the heavy lifting. For those businesses who just need FreshBooks for all their accounting (again, there are many) then we offer everything you need.
Finally, with respect to the roadmap, we don’t share our roadmap as we like to under promise and over deliver. So…we don’t talk about what we’re going to offer until it’s in the product and you can use it. For more on our thoughts here, check out this post:
http://www.freshbooks.com/blog/2008/11/11/5-reasons-why-sharing-your-product-roadmap-is-a-bad-idea/
Mike – many thanks for the comment – all sound arguments…
David – watch this space… some thoughts coming up….