The overall idea of Revenue Recognition Multicurrency is that Synder RevRec should recognize the already converted amounts during the billing period.
Synder RevRec should have its own home currency. The home currency of the accounting platform (e.g. QBO), should be the same as the home currency in Synder RevRec. The exchange rates should be taken from the payment processor, and if they are missing, from the accounting processor.
Overview:
- 1. Exchange rate available in Stripe use case
- 2. No exchange rate in Stripe use case
- 3. Different dates of invoice and other subscription-related transactions (can be postponed)
- 4. Reporting in RevRec
- 5. Multicurrency setup and how to change home currency
Exchange rate available in Stripe use case
Use case:
Payment processor converts the transaction amount to the home currency (e.g. a USD bank account is connected to Stripe and EUR, CAD, GBP payments are converted to USD by Stripe).
Multicurrency flow:
The exchange rate is taken from the subscription invoice in the payment provider (Stripe) as of the invoice date ( considered to be a contract date). The recognition schedules and entries are built based on the already converted home currency amount.
Yearly example
Synder RevRec home currency is USD, Stripe home currency is USD.
Recognition is performed by the “Monthly ratable excluding last period” method.
Recognition is done as of the subscription invoice date exchange rate.
| Txn and date | Source currency amount | Stripe home currency amt = Synder hc amt | Stripe exchange rate=Synder exchange rate | Accounting |
| Invoice #1Jan 12 2023 | 1200 CAD | 888 USD | 0.74 | Deferred revenue +1200 CAD = +888 USD |
| JE #1.1Jan 31 2023 | 74 USD | – | Deferred revenue – 74 USDIncome + 74 USD | |
| JE #1.2Feb 28 2023 | 74 USD | – | Deferred revenue – 74 USDIncome + 74 USD | |
| JE #1.3Mar 31 2023 | 74 USD | – | Deferred revenue – 74 USDIncome + 74 USD | |
| JE #1.4Apr 30 2023 | 74 USD | – | Deferred revenue – 74 USDIncome + 74 USD | |
| JE #1.5May 31 2023 | 74 USD | – | Deferred revenue – 74 USDIncome + 74 USD | |
| JE #1.6Jun 30 2023 | 74 USD | – | Deferred revenue – 74 USDIncome + 74 USD | |
| JE #1.7Jul 31 2023 | 74 USD | – | Deferred revenue – 74 USDIncome + 74 USD | |
| JE #1.8Aug 31 2023 | 74 USD | – | Deferred revenue – 74 USDIncome + 74 USD | |
| JE #1.9Sep 30 2023 | 74 USD | – | Deferred revenue – 74 USDIncome + 74 USD | |
| JE #1.10Oct 31 2023 | 74 USD | – | Deferred revenue – 74 USDIncome + 74 USD | |
| JE #1.11Nov 30 2023 | 74 USD | – | Deferred revenue – 74 USDIncome + 74 USD | |
| JE #1.12Dec 31 2023 | 74 USD | – | Deferred revenue – 74 USDIncome + 74 USD |
As a result:
Synder syncs an invoice in CAD (the source currency) with a conversion rate from Stripe (as it is now):
The Journal Entries are synced in the Synder home currency: USD
Once the recognition is finished:
Deferred Revenue Ending balance = 0
Income = $888
Monthly example
Synder RevRec home currency is USD, Stripe home currency is USD.
Recognition is performed by the “Daily ratable” method.
Recognition is done as of the subscription invoice date exchange rate.
The first invoice was issued on Jan 12 2023, which means the subscription covers 20 days of January and 11 days of February.
The second invoice was issued on Feb 12 2023, which means the subscription covers 17 days of February and 11 days of March.
Recognition should work based on the already converted home currency amounts.
Txn and date | Source currency amount | Stripe home currency amt = Synder hc amt | Stripe exchange rate=Synder exchange rate | Accounting |
| Invoice #1Jan 12 2023 | 100 CAD | 74 USD | 0.74 | Deferred revenue +74 USD |
| JE #1.1Jan 31 2023 | – | =74/31*20=47.74 USD | – | Deferred revenue =-47.74 USDIncome + 47.74 USD |
| Invoice #2Feb 12 2023 | 100 CAD | 75 USD | 0.75 | Deferred revenue +75 USD |
| JE #2.1Feb 28 2023 | – | =74/31*11+ 75/28*17=26.26+45.54=71.8 USD | – | Deferred revenue =-71.8 USDIncome + 71.8 USD |
| JE #2.2Mar 31 2023 | – | =75/28*11=29.46 USD | – | Deferred revenue =-29.46 USDIncome + 29.46 USD |
As a result:
The invoice is synced in the CAD (the source currency) with the conversion rate from Stripe (as it is now):
The Journal Entry is synced in the Synder home currency: USD
Recognized revenue is 29.47+71.9+47.74 = 149 = 74+75
Deferred revenue is 0
No exchange rate in Stripe use case
Use case:
The payment processor doesn’t convert any multicurrency transactions as it has a few banks linked to it (e.g. USD bank and CAD bank accounts are connected to Stripe, so CAD transactions with no conversions are paid out to the CAD bank, and USD transactions with no conversions are paid to the USD bank).
OR
A user has an exchange NOT to the home currency (home currencies in Stripe and QBO are different). Currently, QBO and Synder accounting just take the source currency and convert it to the home currency at their own exchange rates.
Multicurrency flow:
The source currency should be taken in both the above use cases and it should be converted to the Synder RevRec home currency at the exchange rates from an external platform. The recognition schedules and entries are built based on the already converted home currency amount.
Important Note: Currently, the exchange rate, if it is missing in Stripe, is taken from QuickBooks at the moment of sync, not import. However Synder RevRec builds schedules at the moment of import. Synder should have its home currency (matching the accounting platform’s home currency) and the internal exchange rates (taken from external sources*). The amounts are converted based on Synder internal exchange rates and the subscription transactions (invoices/refunds) sync to QuickBooks should happen according to Synder’s internal rates.
* The exchange rates should be taken from the payment processor, and if they are missing, then from the accounting processor.
Yearly example
Synder RevRec home currency is USD, Stripe home currency is CAD, the transaction was in EUR.
Recognition is performed by the “Monthly ratable excluding last period” method.
Recognition is done as of the converted amount by our own conversion rates.
Important Note: Synder’s exchange rate should be used during the invoice sync to the books and based on this converted amount the schedule should be built.
Synder cannot allow QBO to assign their own exchange rate for invoices, but should build schedules on internal exchange rates, as this will cause a difference in the deferred revenue account.
| Txn and date | Source currency amount | Stripe home currency amt | Stripe exchange rate | Synder home currency amt | Synder exchange rate | Accounting |
| Invoice #1Jan 12 2023 | 1200 EUR | 1716 CAD | 1.43 | 1272 USD | 1.06 | Deferred revenue +1272 USD |
| JE #1.1Jan 31 2023 | – | – | – | =1272/12=106 USD | – | Deferred revenue – 106 USDIncome + 106 USD |
| JE #1.2 Feb 28 2023 | – | – | – | =1272/12=106 USD | – | Deferred revenue – 106 USDIncome + 106 USD |
| JE #1.3 Mar 31 2023 | – | – | – | =1272/12=106 USD | – | Deferred revenue – 106 USDIncome + 106 USD |
| JE #1.4 Apr 30 2023 | – | – | – | =1272/12=106 USD | – | Deferred revenue – 106 USDIncome + 106 USD |
| JE #1.5 May 31 2023 | – | – | – | =1272/12=106 USD | – | Deferred revenue – 106 USDIncome + 106 USD |
| JE #1.6 Jun 30 2023 | – | – | – | =1272/12=106 USD | – | Deferred revenue – 106 USDIncome + 106 USD |
| JE #1.7 Jul 31 2023 | – | – | – | =1272/12=106 USD | – | Deferred revenue – 106 USDIncome + 106 USD |
| JE #1.8 Aug 31 2023 | – | – | – | =1272/12=106 USD | – | Deferred revenue – 106 USDIncome + 106 USD |
| JE #1.9 Sep 30 2023 | – | – | – | =1272/12=106 USD | – | Deferred revenue – 106 USDIncome + 106 USD |
| JE #1.10 Oct 31 2023 | – | – | – | =1272/12=106 USD | – | Deferred revenue – 106 USDIncome + 106 USD |
| JE #1.11 Nov 30 2023 | – | – | – | =1272/12 106 USD | – | Deferred revenue – 106 USDIncome + 106 USD |
| JE #1.12 Dec 31 2023 | – | – | – | =1272/12 =106 USD | – | Deferred revenue – 106 USDIncome + 106 USD |
As a result:
The invoice is synced according to Synder’s exchange rate:
The deferred revenue balance will go up by home currency amount:
Journal Entries should be synced in home currency:
Deferred Revenue balance $0
Income account balance $1272
Monthly example
Synder RevRec home currency is USD, Stripe home currency is EUR, and the transaction is in CAD.
Recognition is performed by the “Daily ratable” method.
Recognition is done as of the internal Synder’s subscription invoice date exchange rate.
The first invoice was issued on Jan 12 2023, which means the subscription covers 20 days of January and 11 days of February.
The second invoice was issued on Feb 12 2023, which means the subscription covers 17 days of February and 11 days of March.
Recognition should work based on the already converted by Synder’s RevRec home currency amounts.
| Txn and date | Source currency amt | Stripe home currency amt | Stripe exchange rate | Synder home currency amt | Synder’s exchange rate | Accounting |
| Invoice #1Jan 12 2023 | 100 CAD | 70 EUR | 0.7 | 74 USD | 0.74 | Deferred revenue +74 USD |
| JE #1.1Jan 31 2023 | – | – | – | =74/31*20=47.74 USD | – | Deferred revenue =-47.74 USDIncome + 47.74 USD |
| Invoice #2Feb 12 2023 | 100 CAD | 71 EUR | 0.71 | 75 USD | 0.75 | Deferred revenue +75 USD |
| JE #2.1Feb 28 2023 | – | – | – | =74/31*11+ 75/28*17=26.26+45.54=71.8 USD | – | Deferred revenue =-71.8 USDIncome + 71.8 USD |
| JE #2.2Mar 31 2023 | – | – | – | =75/28*11=29.46 USD | – | Deferred revenue =-29.46 USDIncome + 29.46 USD |
As a result:
For existing exchange rates, see the Monthly example; The only difference is where the conversion rate comes from.
Deferred Revenue balance $0
Income account balance 74+75 = $149
Different dates of invoice and other subscription-related transactions (can be postponed)
Exchange gain or loss:
1. For invoices and payments with differences in time
Sometimes an invoice is finalized first, and paid later. In this case, the exchange rate may have changed between the finalization and payment, creating a need to track gains and losses because of foreign exchange rates.
For revenue recognition purposes (for example, calculating accounts receivable), any activity that gets booked before an invoice is paid, uses an estimated exchange rate at the time the invoice is finalized. The difference between the estimated exchange rate and the actual exchange rate, if any, is added to the Exchange gain or loss account.
| ACCOUNT | JAN | FEB |
| AccountsReceivables | +36.00 | -36.00 |
| Revenue | +36.00 | |
| Clearing | +33.00 | |
| Exchange gain or loss | +3.00 |
2. For Refunds/disputes
- On January 1, the customer makes a one-time payment for 30 EUR. The EUR to USD exchange rate is 1.20.
- On February 1, they received a refund of 30 EUR. The EUR to USD exchange rate is 1.10
Because the exchange rate changed, you received 36 USD, but were refunded only 33 USD, resulting in the Exchange loss of -3 USD.
| ACCOUNT | JAN | FEB |
| Revenue | +36.00 | |
| Clearing | +36.00 | -36.00 |
| Refunds | +33.00 | |
| Exchange gain or loss | -3.00 |
Reporting in RevRec
All reports in Synder should show up in Synder’s home currency.
Multicurrency setup and how to change home currency
The most important thing for the correct multicurrency revenue recognition is for Synder’s home currency to match the home currency of the connected accounting platform (for example, QuickBooks). So below, you will find use cases and how Synder will go about the multicurrency setup in each of them .
Important note : The home currency is taken from the connected accounting platform at the moment of connection and it cannot be changed manually. If you need to change it, you can create a new organization/client in Synder and set revenue recognition from scratch there. Once the accounting system is connected, the current home currency will be taken from there.
Use case 1:
Multicurrency processing is enabled in the accounting software.
Synder:
Once Synder gets connected to the accounting software and sees that multicurrency is enabled in it, it will automatically acquire the home currency from the accounting platform. There is no need to change it or set it manually in this case, it will be preselected by default .
Use case 2:
Multicurrency processing is disabled in the accounting software.
Synder:
Once Synder gets connected to the accounting software and sees that multicurrency is disabled there, Synder will still pull the home currency from the accounting platform.
Important note: If multicurrency is enabled in the accounting platform later and it doesn’t match the one in Synder, the user will be able to see the message on the Overview page (or any other reporting pages we might have in the future, and on the Configuration page saying “Your Synder RevRec home currency and accounting software home currency don’t match, so the reports are displayed in different currencies and therefore will not match. Change currency”.
Reach out to the Synder team via online support chat, phone, or email with any questions you have – we’re always happy to help you!