I just discovered that I'm losing money on my foreign customers because of the way that QBO handles currency conversion on expenses.

Here's the problem.

I'm in Canada, and I have some US customers. Some of my expenses, most notably my air fare, are incurred here and so in Canadian dollars, for which I have to bill my customers in US dollars.

Let's say I incur a charge of $1,300 CAD. Because I have to convert my client's USD to CAD to pay for it, I want to use my bank's USD-to-CAD exchange rate at the time that I generate my invoice. I then attach a printout of the bank's exchange rate to the invoice to justify it. Naturally, there will be a small loss or gain due to fluctuations in the exchange rate after I get paid and then pay the credit card bill, but that pretty much evens out over time so there's no issue there.

The problem is in the exchange rate itself. Banks charge a premium above the nominal exchange rate, so what QBO records as the exchange rate is not the rate I pay for the USD-to-CAD conversion.

Let's assume, for argument's sake, that there is no fluctuation in the exchange rate in the period of time between incurring an expense, billing for it, being paid, and converting the payment from USD to CAD to pay the credit card bill.

I incur a charge of $1,250 CAD and the nominal exchange rate at the time is 1.2500. I mark the expense as billable and select my USD customer, so QBO therefore records an unbilled expense in the amount of $1,000 USD. I invoice my customer, they pay into my US dollar account, and then I go to pay my credit card bill on which the expense appears.

To pay the credit card bill, I need to convert USD to CAD. However, even though the nominal exchange rate is 1.2500, the bank charges a premium and their exchange rate is only 1.2250. That $1,000 USD, which was intended to reimburse the full amount of $1,250, is worth only $1,225. I'm out $25, because I have no way to set the exchange rate on an unbilled expense in CAD when billing a USD client. I have now lost $25. Add up all my travel and other expenses over the course of the year and I'm losing hundreds of dollars on this.

I don't have a problem going the other way. I have a USD credit card, so if I have a USD expense incurred on behalf of a CAD client, then when it's time to invoice the Canadian client, I simply go back to the original expenses and update the exchange rate to the bank's CAD-to-USD exchange rate before generating the invoice for my expenses. Doing so automatically updates the unbilled expense records to the right CAD amount. If I had the same ability to go back to CAD expenses for US customers, the problem would be solved.