Fix Xero Multi-Currency Exchange Rate Errors

10-minute fixVerified for Xero 2025Medium difficulty

Quick Answer:

Multi-currency exchange rate issues in Xero include incorrect rates, slow updates, and conversion calculation errors. Fix by manually updating rates, checking rate sources, and using lock dates to prevent historical changes.

What are Multi-Currency Exchange Rate Issues?

Multi-currency exchange rate problems affect international businesses using Xero. The new invoicing system has introduced issues with incorrect rates, slow currency updates, and lack of flexibility when handling multi-currency invoices.

Error Multi-Currency: Incorrect exchange rates or conversion errors

Exchange rates not updating correctly or conversion calculations showing wrong amounts.

Symptoms:
  • •Invoice amounts incorrect in foreign currency
  • •Exchange rates not updating automatically
  • •Manual rate entry not saving correctly
  • •Historical transactions changing value unexpectedly
  • •Realized/unrealized gains calculating incorrectly
  • •Rate differences between invoice date and payment date
Resolution Steps:
  1. 1.
    Manually update exchange rates
  2. 2.
    Check rate source settings
  3. 3.
    Use lock dates to protect historical data
  4. 4.
    Verify rate calculation method
  5. 5.
    Review bank account currency settings

Quick Fix (10 Minutes)

Fastest Solution

  1. Go to Settings → General Settings → Currencies
  2. Click "Add Exchange Rate" for the affected currency
  3. Enter correct rate and date
  4. Save and verify transactions now show correct amounts
  5. Set up automatic rate updates if not enabled

Detailed Solution Steps

  • 1
    Manually Update Exchange Rates

    Override incorrect automatic rates with correct values:

    1. Navigate to Settings → General Settings
    2. Click on "Currencies" section
    3. Find the currency with incorrect rate
    4. Click "Add Exchange Rate"
    5. Enter the date and correct exchange rate
    6. Save the rate
    7. Existing transactions with that date will update automatically

    Use lock dates to prevent accidental changes to historical rates that could affect closed periods.

  • 2
    Enable Automatic Rate Updates

    Configure Xero to pull rates automatically:

    1. Go to Settings → General Settings → Currencies
    2. Check if "Automatic rate updates" is enabled
    3. Xero pulls rates from XE.com daily
    4. If disabled, enable it for automatic updates
    5. Note: Rates update once daily, not real-time
    6. Manual entry still possible when needed

    Automatic updates happen once per day. For time-sensitive transactions, verify rates manually before creating invoices.

  • 3
    Set Up Lock Dates

    Protect historical exchange rates from changes:

    1. Go to Settings → General Settings → Financial Settings
    2. Set a "Lock Date" for closed periods
    3. This prevents rate changes affecting historical transactions
    4. Use for month-end or year-end closures
    5. Only advisors can edit locked periods
    6. Recommended: Lock previous month after reconciliation
  • 4
    Handle Invoice vs Payment Rate Differences

    Manage exchange rate fluctuations between invoice and payment:

    1. Xero uses invoice date rate for invoice amount
    2. Payment date rate applies when payment received
    3. Difference creates realized gain/loss
    4. Review "Realized Currency Gains" report
    5. Verify gains/losses are posting to correct accounts
    6. Consider hedging for large amounts
  • 5
    Fix Conversion Calculation Errors

    Address wrong conversion amounts on transactions:

    1. Check the exchange rate used on the specific transaction
    2. Go to transaction and click "Edit"
    3. Verify the exchange rate field shows correct rate
    4. If incorrect, update to correct rate manually
    5. Save and verify converted amount is now correct
    6. Note: Changes may affect unrealized gains/losses

    • Why Do Multi-Currency Issues Occur?

    Common Causes

    • Slow Rate Updates: Automatic updates only happen once daily, not real-time, causing outdated rates
    • Manual Entry Errors: Incorrect rates entered manually or typos in rate values
    • Rate Source Issues: XE.com feed temporarily unavailable or delayed
    • Historical Changes: Rates changed retroactively affecting closed periods and reports
    • Invoice/Payment Date Gaps: Different rates between invoice creation and payment receipt dates
    • New Invoicing System Bugs: 2025 update introduced flexibility issues with multi-currency handling

    Prevention Tips

    Best Practices:

    • Enable automatic exchange rate updates for consistent daily rates
    • Set lock dates at month/quarter/year-end to protect historical data
    • Verify rates before creating high-value foreign currency invoices
    • Process payments promptly to minimize rate fluctuation impact
    • Review currency gains/losses reports monthly to catch issues early
    • Document foreign exchange policies for your business

    Related Resources

    Xero Invoice Not Sending

    Fix invoice delivery issues

    Xero Bank Reconciliation

    Fix reconciliation discrepancies

    Need Professional Help?

    For complex multi-currency accounting setups or foreign exchange compliance issues, our experts can help configure Xero properly for international operations.

    Get Expert Support