Using multiple currencies
You can define a default currency for each customer and vendor. You can also define customer or vendor currencies other than the default currency, to use for specific sets of customer and vendor transactions. The transaction currency is no longer required to be in the customer or vendor default currency.
The customer and vendor currencies might be different than your company's base (domestic) currency. SyteLine makes this possible through these multi-currency features:
- Maintainable currency rates.
- Transactions that use either fixed or variable rates. To specify a fixed rate for a specific transaction, select the Fixed Rate check box in the transaction's form.
- Euro conversion tools.
- FASB52 compliance.
- Recognition of currency exchange rate gains or losses.
- Customer and vendor transactions can be maintained in the foreign currency but can quickly be translated to your domestic currency.
- Customer and vendor payments are in the currency of the associated bank. Customer payments can be entered in a currency other than the currency of the bank where the payment will be deposited. In that case, the currency will be converted to the currency of that bank.
- Your general ledger maintained in your domestic currency.
Customer amounts can be stored in the system in the customer's default currency. This affects customer orders, estimating, and A/R.
Vendor amounts can be stored in the vendor's default currency. This affects purchase orders and A/P.
In addition to the default currency specified for a customer or vendor, you can define other currencies for a customer or vendor. Certain types of transactions have been modified to support these additional currencies used for the transaction currency.
Thus, if two sites in different countries use the same vendor, but the vendor uses a different currency in each country, you can use the same vendor number in both sites, but specify a different currency to be used for specific types of transactions.
Cash accounts used in bank reconciliations may be stated in non-domestic currencies. Payments are in the currency of the associated bank.
All amounts in journals, ledger, inventory (price and cost), and the shop floor are always stated in domestic currency.
When amounts are posted into journals, they are translated into domestic currency.
Currency master data
The domestic (base) currency for a site is defined in the Multi-Currency Parameters form.
Other currencies are maintained in the Currency Rates form. Users can enter an unlimited number of date- and time-stamped currency exchange rates. They can also back-date these rates by entering a past date. There are two exchange rates entered:
- The buying rate is used exclusively in purchase orders and A/P.
- The selling rate is used exclusively in customer orders, estimating, and A/R.
In the Currency Codes form, users can specify formats for currency amounts, and accounts to use for currency gains and losses.
For better integration with other applications, we recommend that you use the standard ISO currency codes.
Applying payments
You cannot apply payments to invoices of other sites where the other sites do not have the same base currency as the site entering the payment to apply.
Realized and unrealized gains and losses
When a company that is headquartered in one (domestic) country executes a transaction with a company in another (foreign) country using a currency other than the domestic currency, one currency needs to be converted into another to settle the transaction. This conversion from one currency to another creates gains and losses depending on the currency exchange rate.
Realized currency exchange gains and losses can occur when full or partial payments are applied to voucher or invoice amounts.
However, if financial statements are prepared between the date of the original transaction (sale or purchase on account, for example) and the date of the cash receipt or cash payment, and the exchange rate has changed since the original transaction, an unrealized gain or loss must be recognized in the statements.
Consolidated financial statements with foreign subsidiaries
Before the financial statements of domestic and foreign companies are consolidated, the amounts shown on the statements for the foreign companies must be converted to domestic currency. Asset and liability amounts are normally converted to domestic currency by using the exchange rates as of the balance sheet date. Revenues and expenses are normally converted by using the exchange rates that were in effect when those transactions were executed. For practical purposes, a weighted average rate for the period is generally used. The adjustments (gains or losses) resulting from the conversion are reported as a separate item in the stockholders' equity section of the balance sheets of the foreign companies.
After the foreign company statements have been converted to domestic currency, the financial statements of domestic and foreign subsidiaries are consolidated in the normal manner. See the ledger consolidation information in Entities for more information.