AI agents for business finance: what they can and can't do
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The short answer
A Spanish business that trades in naira keeps its accounts in euros but records each naira transaction twice: the naira amount and its euro value at the exchange rate on the transaction date. When the naira is later paid or received at a different rate, the difference is a realised exchange gain or loss in profit and loss; open naira balances at the period end are retranslated at the closing rate, as IAS 21 describes.
Start with the currency your books are kept in
A Spanish SL reports in euros. That is its functional currency in the language of IAS 21, the international standard on foreign exchange: the currency of the main economic environment in which it operates, judged mainly by the currency that drives its sales prices and its labour and material costs. A Nigerian subsidiary, by contrast, will usually have the naira as its functional currency. Keep that distinction clear from the start, because it decides which balances are 'foreign' in each set of books. The rule for Spanish statutory accounts is in Spain's own accounting plan; your asesor will apply it, but the logic below is the same.
Set up the ledgers so naira never gets lost
- One bank ledger per currency. A naira account is recorded in naira and in euros. Never net it into a euro bank ledger.
- Customer and supplier ledgers in their invoice currency. A Nigerian client billed in naira stays a naira receivable until it is paid.
- Two exchange-difference accounts: realised (on settlement) and unrealised (on period-end retranslation), so you can see which gains are cash and which are paper.
- A rate log: date, rate, source and who entered it, for every rate you use.
Most accounting packages used in Spain support foreign-currency ledgers; switch the feature on before the first naira invoice rather than fixing it later.
How a naira transaction moves through the books
IAS 21 sets out the sequence. A foreign-currency transaction is first recorded at the spot rate on the transaction date (paragraph 21). At each reporting date, monetary items such as receivables, payables and bank balances are translated at the closing rate, while non-monetary items held at cost stay at their historical rate (paragraph 23). Differences on settlement or retranslation go to profit or loss in the period they arise (paragraph 28).
Worked example (illustrative rates, not real rates). On 1 March you invoice a Lagos client ₦3,200,000 for consulting. Your chosen source shows ₦1,600 to €1 that day, so you book a receivable and revenue of €2,000.00. The client pays on 15 April, when your source shows ₦1,700 to €1. The ₦3,200,000 is now worth €1,882.35.
| Entry | Naira | Euros |
|---|---|---|
| 1 March: receivable and revenue | ₦3,200,000 | €2,000.00 |
| 15 April: cash received | ₦3,200,000 | €1,882.35 |
| Realised exchange loss | €117.65 |
Revenue stays at €2,000.00. The €117.65 is a separate exchange loss, not a reduction in sales. Keeping them apart shows whether the business is selling well and losing on currency, or the other way round.
Fees, conversions and bank charges
Conversion costs should be visible, not buried in the rate. When you convert naira to euros, record three things: the amount converted, the rate applied, and any separate fee. If the provider shows the fee on its own line, book it as a bank charge; if the cost sits inside the rate, the difference against your reference rate becomes part of the exchange result. Nigerian transfer charges, such as the ₦50 stamp duty a sender pays on electronic transfers of ₦10,000 or more under the Nigeria Tax Act 2025, are expenses of the payer.
The monthly close in two currencies
- Reconcile each bank account in its own currency against the statement.
- Match naira receipts and payments to open invoices; record realised differences on each.
- Retranslate open naira balances at the closing rate if you report monthly; reverse or carry as your accountant prefers.
- Review the rate log for gaps and odd rates.
- File supporting documents (invoices, contracts, payment confirmations) under each transaction.
The Nigeria library's guide to foreign currency accounting covers revaluation in more detail; our companion piece on which exchange rate to use deals with choosing the rate itself.
Common mistakes we see
- Booking a naira receipt at whatever euro amount landed after conversion, which hides the exchange result inside revenue.
- Using a different rate source each month, so nobody can recreate the figures later.
- Treating a naira advance to a Nigerian supplier as an expense before the goods or service arrive.
- Mixing the founder's personal naira spending with the company's naira account; keep them apart from the first day.
- Leaving year-end retranslation to the auditor, who then finds months of unrecorded differences.
Where Pryme fits
A Pryme Business Account holds euros and naira in separate balances with local details for each, which mirrors the ledger structure above. Swap shows the rate and the fee separately before you approve, so both can be booked correctly. The Finance agent prepares the monthly matching for a person to approve; see our article on reconciling euro and naira payments with an AI agent.
Questions people ask
What currency should a Spanish company keep its books in?
Euros. Naira transactions are recorded at their euro value on the transaction date, with exchange differences shown separately.
Is an exchange loss on a naira invoice a cost of sales?
No. Under IAS 21 it is an exchange difference recognised in profit or loss, kept apart from revenue and cost of sales.
Do I need a naira bank ledger?
Yes. Recording a naira account in its own currency, with its euro value, is the only way to reconcile it against the bank statement.
What is an unrealised exchange gain?
The change in euro value of an open naira balance, such as an unpaid invoice, when it is retranslated at the closing rate at a reporting date.
Sources
- IFRS Foundation: IAS 21 The Effects of Changes in Foreign Exchange Rates (2026 text) · accessed Oct 2026
- Kuda Business Help: Stamp duty on transfers under the Nigeria Tax Act 2025 (31 Dec 2025) · accessed Oct 2026
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