Supplier invoices in another currency: setting Shopify costs correctly
Short version: Shopify's Cost per item is in your store currency, so a supplier invoice in another currency has to be converted before you enter costs. Use the rate you actually paid (or a consistent reference rate), convert after any discount, leave out VAT you can reclaim, and keep a note of the rate with the invoice.
Buying across borders is normal for European and UK shops, and common for US shops importing from Europe or Asia. A UK shop buying from a Dutch supplier gets euro invoices; a German shop buying from the US gets dollar invoices. Entering those numbers straight into Shopify as if they were your currency is one of the most common causes of wrong margins.
What Shopify does with currencies
- Store currency. Your store has one currency in which products, costs and reports are kept. Cost per item is entered in it.
- Purchase orders. Native purchase orders let you choose a Supplier currency per order. Changing it updates all pricing fields on that purchase order. That's for the purchase order itself; it doesn't create a currency-aware cost history for your products.
- Selling in other currencies (Shopify Markets) converts your prices for customers. It doesn't affect how you record supplier costs.
Step 1: Pick your exchange rate method
There's no single right rate, but there is a right habit: pick one method and use it every time.
| Method | Pros | Cons |
|---|---|---|
| Rate actually paid (from your bank or card statement) | True cost, includes conversion fees | Only known when you pay, often after the goods arrive |
| Reference rate on the invoice date (e.g. ECB euro rates, HMRC monthly rates) | Simple, consistent, easy to audit | Ignores your bank's margin and fees |
| A fixed planning rate, reviewed quarterly | Stable margins, easy pricing | Drifts from reality when currencies move |
Many small shops use the reference rate on the invoice date for costs, and let their accountant handle the difference when the invoice is paid. Ask what your accountant prefers, so your Shopify costs and your books tell the same story.
Step 2: Convert in the right order
- Start from the net unit price on the invoice, after line discounts.
- Apply any invoice-level discount proportionally.
- Convert to your store currency at your chosen rate.
- Add your share of freight and duty if you use landed cost (converting those charges too).
- Round to two decimals only at the end.
Example: a UK shop buys tea at €6.60 per tin. At a rate of €1 = £0.85, cost per item is £5.61. If the bank charged a 1% conversion fee on payment, the true cost is about £5.67.
Step 3: Get VAT right
UK and EU (VAT-registered)
If you're VAT-registered and can reclaim the VAT you're charged, VAT isn't a cost to you. Enter the net price in cost per item. Intra-EU B2B invoices between VAT-registered businesses are often zero-rated under the reverse charge, so the invoice may show no VAT at all. Imports into the UK may involve import VAT, which registered businesses can usually reclaim.
Not VAT-registered
If you can't reclaim VAT, it's part of what the goods cost you. Include it in cost per item.
US
Wholesale purchases for resale are often exempt from sales tax with a resale certificate. Import duties and tariffs on goods from abroad are a cost and belong in landed cost.
Tax rules vary by country and business type. Treat this as orientation, and confirm with your accountant.
Step 4: Record and update
- Note the rate used on the invoice (or in your receiving spreadsheet). When someone asks why a cost is £5.61, you can answer.
- Update Cost per item with the converted values (bulk methods).
- Review costs when the rate moves a lot. A 5% currency swing on a supplier you buy from monthly deserves a fresh look at margins, even if their price list hasn't changed. See spotting price increases.
Number formats to watch
European invoices write numbers differently: 1.234,50 in Germany, Spain, Italy, the Netherlands and Romania means one thousand two hundred thirty-four and a half; in the UK and US it's written 1,234.50. French invoices often use a space: 1 234,50. A spreadsheet in the wrong locale will misread these silently, so check a few values after pasting.
Where Box to Shelf helps
Box to Shelf detects the currency on each invoice and reads European number formats correctly. If the invoice currency differs from your store currency, cost updates are switched off for that document until you confirm converted costs, so a euro amount isn't written into a pound or dollar store by mistake. Stock can still be received from the same document straight away.
Questions
What currency is Shopify cost per item in?
Cost per item is entered in your store's currency.
Should cost per item include VAT?
If you can reclaim the VAT you paid the supplier, usually not: record the net cost. If you can't reclaim it, it is part of your cost. Check with your accountant.
Sources
- Shopify Help Center: Managing suppliers (supplier currency on purchase orders)
- Shopify Help Center: Cost per item
- European Central Bank: Euro foreign exchange reference rates
- GOV.UK: Exchange rates for customs and VAT
- GOV.UK: Imports and VAT (VAT Notice 702)
Shopify changes its admin often. Steps were checked against the Shopify Help Center in November 2026; if a menu has moved, the help center links above have the current version.