Multi-Currency Accounting and FX for Global SaaS

Functional Currency Comes First

• Functional currency is the currency of the primary economic environment in which an entity operates, not simply where it is incorporated.
• Under ASC 830, you assess indicators such as the currency of pricing, cash flows, financing, and expenses to determine each entity's functional currency.
• Many early SaaS parents keep USD as the functional currency even when they invoice some customers in euros or pounds.
• A foreign subsidiary that pays local salaries and collects local revenue often has a functional currency different from the parent.