Foreign currency cash desk

What it means

A foreign currency cash desk is a separate cash fund for foreign currency, used for example for business trips abroad or in trade with foreign partners. It is kept separately from the euro cash desk, usually one per currency, and has its own cash book.

Movements in the foreign currency cash desk are recorded both in the foreign currency and in euros. The conversion uses the ECB reference rate on the day of the transaction or the rate at which the company bought the currency. The method should be set out in an internal policy and applied consistently.

Because the rate changes between buying and spending the currency, movements give rise to exchange differences. These are booked as financial expenses or income and affect profit, even though the company does not trade in currency as such.

How it works in practice

For a business trip abroad, the employee receives an advance in foreign currency from the cash desk and, on return, accounts for the foreign per diem, accommodation and other expenses. Unspent currency is returned to the cash desk, or the difference is settled in euros according to the policy.

A valuation method must be chosen for cash paid out, such as first-in first-out or weighted average. The method affects the size of exchange differences and should be applied consistently so that the books are verifiable and comparable between periods.

At the end of the reporting period, the balance of the foreign currency cash desk is translated at the ECB rate on the reporting date and the difference booked as an exchange difference. A cash count is carried out at the same time to compare physical currency with the book balance.

What to watch out for

Cash payments in foreign currency are subject to the same limits and rules as euro payments, including the restriction on cash payments above the statutory threshold. When converting to euros, the total value of the payment counts, not just the amount in the foreign currency.

A foreign currency cash desk adds administrative work and the risk of errors. If the company needs foreign currency only occasionally, it may be simpler to use a company card or let the employee pay with their own funds and reimburse them in euros.