Currency Handling: Managing International Suppliers
You order from Germany (EUR), UK (GBP), China (CNY). How do you manage multiple currencies?
The Currency Landscape
Your Base Currency
Synplex base currency = Your home currency
Examples:
├─ US company: USD (dollar)
├─ EU company: EUR (euro)
├─ UK company: GBP (pound)
├─ German company: EUR (euro)
Setting:
├─ Set in Synplex settings (once)
├─ Synplex syncs with your Shopify base currency
├─ Used as reference for all conversions
└─ Can't change without major recalculation
PO Currency (Can Differ)
Currency you order in (supplier's preferred currency)
Example:
├─ Your base: USD
├─ Supplier 1 (Germany): EUR
├─ Supplier 2 (UK): GBP
├─ Supplier 3 (China): CNY
You can set different PO currency for each supplier
├─ Supplier's quote: EUR 45/unit
├─ You create PO in: EUR (match supplier)
├─ Synplex converts to: USD for your accounting
The Three-Currency Flow
Timeline:
PO CREATION (August 15):
├─ Supplier quotes: EUR 45/unit
├─ You create PO currency: EUR
├─ Synplex base currency: USD
├─ Exchange rate TODAY: 1 EUR = 1.10 USD
├─ PO total in EUR: €6,525
├─ PO total in USD (for accounting): $7,177.50
└─ Rate is LOCKED at this moment
SHIPMENT (September 30):
├─ Goods shipped in EUR invoice
├─ Still €6,525 (no change)
├─ USD accounting still shows: $7,177.50
└─ No payment yet
PAYMENT (October 30):
├─ Invoice due: €6,525 (EUR, not changed)
├─ Exchange rate TODAY: 1 EUR = 1.05 USD (dropped!)
├─ Actual payment in USD: $6,850.50
├─ Synplex records: Actual payment = $6,850.50
├─ Gain: $327 from favorable rate! ← YOU BENEFIT
└─ PO cycle complete
When Conversion Happens
At PO Creation
Step 1: Select PO Currency
├─ Supplier quote is in: EUR
├─ You select PO currency: EUR
├─ Synplex detects: EUR ≠ USD (conversion needed)
└─ Triggers: Conversion rate step
Step 2: Enter or Auto-Fetch Conversion Rate
├─ Rate: 1 EUR = 1.10 USD
├─ Source: Auto-fetch (current market) or manual entry
└─ Applied: Synplex calculates USD equivalent
Step 3: Conversion Applied
├─ What changes:
│ ├─ Product cost: €45 × 1.10 = $49.50 USD
│ └─ Total: €6,525 × 1.10 = $7,177.50 USD
│
├─ What stays in EUR:
│ ├─ PO shows: €6,525 (supplier's currency)
│ └─ For supplier: Always EUR
│
└─ Result: You see both EUR and USD values
NOT At Payment Time
Why the rate doesn't change at payment:
├─ PO is locked at creation
├─ Payment is separate currency decision (File 04)
├─ If rate changes by payment time:
│ └─ It affects payment amount, not PO cost
│ └─ This is GOOD for you (can benefit from favorable rates)
What Gets Converted
CONVERTED to Your Base Currency:
✓ Product costs
└─ €45/unit × qty → USD equivalent
✓ Additional fees in PO
└─ Shipping: €200 → $220 USD
└─ Handling: €50 → $55 USD
✓ Total order value
└─ €6,525 total → $7,177.50 USD
Result: You see in your accounting currency
NOT CONVERTED (Separate):
❌ Payment currency
└─ Set at payment time
└─ Can differ from PO currency
└─ Example: PO in EUR, pay in USD (if agreed)
❌ Shipment costs
└─ Freight in GBP (carrier is British)
└─ Separate conversion at shipment stage
└─ Not included in PO conversion
❌ Insurance
└─ If purchased separately
└─ May be in different currency
└─ Tracked separately in landed cost
Conversion Rates: How to Choose
Option 1: Auto-Fetch (Recommended)
Process:
├─ Click: [Auto-Fetch Current Rate]
├─ Synplex retrieves: Live market rate
├─ Example: 1 EUR = 1.10 USD (as of today)
├─ Rate applied: Immediately
└─ Advantage: Always current, accurate
Use when:
├─ Supplier quotes in current market rate
├─ You want live pricing
├─ No special agreements with supplier
└─ Most common scenario
Option 2: Manual Entry
Process:
├─ Click: [Manual Entry]
├─ You enter: 1 EUR = 1.10 USD
├─ Rate applied: As you entered
└─ Advantage: Control, locking rates
Use when:
├─ Supplier agreed to locked rate
└─ Example: "I'll hold €45 @ 1.10 rate for 30 days"
├─ You have forward contract with bank
├─ You negotiated special rate
└─ You want cost certainty
Which is Better?
Auto-fetch:
├─ Pros: Current market rate, simple
├─ Cons: Rate changes by payment time
├─ Use: Standard international orders
Manual entry (locked):
├─ Pros: Cost certainty, no surprises
├─ Cons: Supplier may charge premium for locking
├─ Use: Large orders, long lead times
Real Multi-Currency Example
Your company: US-based (USD)
Suppliers: Germany, UK, China
Monthly orders:
ORDER 1: Germany
├─ Product: Winter Jacket
├─ Quote: €45/unit (in EUR)
├─ Quantity: 100 units
├─ PO currency: EUR
├─ PO total: €4,500
├─ Conversion: 1 EUR = 1.10 USD
├─ PO in USD: $4,950
│
├─ At payment (month later):
│ ├─ Rate: 1 EUR = 1.05 USD
│ └─ Payment: €4,500 × 1.05 = $4,725 (SAVED $225!)
ORDER 2: UK
├─ Product: Blue T-Shirt
├─ Quote: £15/unit (in GBP)
├─ Quantity: 200 units
├─ PO currency: GBP
├─ PO total: £3,000
├─ Conversion: 1 GBP = 1.25 USD
├─ PO in USD: $3,750
│
├─ At payment:
│ ├─ Rate: 1 GBP = 1.20 USD
│ └─ Payment: £3,000 × 1.20 = $3,600 (SAVED $150!)
ORDER 3: China
├─ Product: Socks
├─ Quote: ¥250/unit (in CNY)
├─ Quantity: 1000 units
├─ PO currency: CNY
├─ PO total: ¥250,000
├─ Conversion: 100 CNY = 14 USD
├─ PO in USD: $35,000
│
├─ At payment:
│ ├─ Rate: 100 CNY = 13.50 USD
│ └─ Payment: ¥250,000 × 13.50 ÷ 100 = $33,750 (SAVED $1,250!)
TOTAL savings from favorable exchange rates: $1,625!
(All from rate changes between order and payment)
Currency Risk Management
Risk 1: Rates Move Against You
Scenario:
├─ PO created: 1 EUR = 1.10 USD
├─ PO total in USD: $7,177.50
│
├─ Rate drops to: 1 EUR = 1.00 USD (20 days later)
├─ Actual payment: €6,525 × 1.00 = $6,525
├─ SAVE: $652.50 from favorable move ✓
│
├─ BUT if rate rises to: 1 EUR = 1.20 USD
├─ Actual payment: €6,525 × 1.20 = $7,830
├─ COST: Extra $652.50 from unfavorable move ✗
Risk 2: Timing Risk
You have control over payment timing:
PO due: NET 30 (October 30)
Can you pay earlier or later?
If rates are improving:
├─ Wait until October 30 (last day)
├─ Benefit from better rates
└─ Example: Rate improves 1 EUR = 1.05 USD, save money
If rates are worsening:
├─ Pay as soon as possible (maybe early)
├─ Lock in current rate
└─ Avoid paying when rate is worse
Risk 3: Large Orders
Order value: €50,000
Rate uncertainty: ±2% possible
Cost impact:
├─ If rate drops 2%: You save €1,000 ($1,100 at 1.10)
├─ If rate rises 2%: You pay €1,000 extra
└─ Total risk: ±€1,000
Strategy:
├─ Option A: Accept the risk (usually OK)
├─ Option B: Lock the rate with supplier
├─ Option C: Use forward contract (bank)
├─ Option D: Split order, stagger timing
└─ Decision: Based on your risk tolerance
Synplex Currency Features
Dashboard View
You can see:
├─ Base currency: USD
├─ All POs converted to USD for accounting
├─ Comparison by supplier currency:
│ ├─ EUR suppliers: Total €40,000 = $44,000
│ ├─ GBP suppliers: Total £30,000 = $37,500
│ └─ CNY suppliers: Total ¥500,000 = $70,000
├─ Total payables: $151,500 USD
└─ All shown in your base currency
PO Level Detail
For each PO, you see:
├─ PO currency: EUR
├─ Amount in PO currency: €6,525
├─ Conversion rate: 1 EUR = 1.10 USD
├─ Amount in base currency: $7,177.50
├─ Payment currency (separate): EUR
├─ Actual payment amount: $6,850.50 (different!)
└─ Gain/Loss: -$327 (favorable rate change)
Currency Decision Framework
Before Creating PO:
Question 1: What currency is supplier's quote?
├─ Answer: EUR (they're German)
└─ Action: Set PO currency = EUR
Question 2: Is this different from my base currency?
├─ Answer: Yes (my base is USD)
└─ Action: Conversion will be triggered
Question 3: Should I lock the rate?
├─ If large order: Maybe (€50,000+)
├─ If standard order: Probably not
├─ If rates volatile: Maybe
└─ Decision: Lock (manual) or current (auto-fetch)
Question 4: When will I pay?
├─ NET 30, NET 60?
├─ Decision: More time = more rate risk/reward
└─ Action: Monitor rates between order & payment
FAQ
Q: What if I accidentally create PO in wrong currency?
A: Edit the PO (before sending) and change currency. Conversion rate updates automatically.
Q: Can supplier change their quote currency?
A: Rare, but negotiate upfront. "Please quote in EUR, not USD" (their normal currency).
Q: Should I always use auto-fetch for rates?
A: Usually yes. It's current and accurate. Manual entry only if you have special agreement.
Q: What if supplier wants payment in different currency than PO?
A: Possible. Discuss in negotiations. "I'll order in EUR, but pay in USD?" Supplier may require PO currency.
Q: How do I know which suppliers quote in which currency?
A: It's in their standard pricing. German: EUR, UK: GBP, US: USD. Check their website or ask.
Q: Does Synplex update rates automatically?
A: No. Rate is locked when you set it (PO creation). Payment rate is set at payment time (separate).
Next Steps
- Create a PO with EUR supplier (practice)
- Set conversion rate (auto-fetch first time)
- Note the USD equivalent (for your accounting)
- Monitor rate changes (until payment)
- Pay strategically (File 04 currency strategy)
Related
- File 01: Creating POs — Where currency is selected
- File 04: Payments & Terms — Where payment currency matters
- File 05: Landed Costs — Multi-currency landed costs
Questions? Contact support@synplex.io