Independent multicurrency system

You use an independent multicurrency system in countries with an unstable local currency. For example, you can report to the tax authorities in the local currency and use a more stable currency for the company's financial management.

You can use an independent multicurrency system in both a single-company environment and in a multicompany (multiple countries) LN environment.

Defining the currencies

Each logistic and financial company in an independent multicurrency environment must have the same:

• Reference currency
• Local currency
• Reporting 1 currency
• Reporting 2 currency

Independent calculation

You must define the exchange rate of each external currency to each home currency. LN converts all the external currency amounts to all the home currencies and calculates and registers the amounts in each home currency independently.

Nor currency rates are used between the home currencies of an independent multicurrency system. Therefore, the home currencies are independent.

Exchange gain and loss calculation

Converting the transaction amounts directly from the transaction currency into the home currencies can result in inconsistencies between the transaction values in the different currencies.

For example, the exchange rates from USD to CHF and from DEM to CHF can be inconsistent with the exchange rate between USD and DEM. This can be caused by shifting exchange rates between the currencies, which is often the case with currencies that are subject to substantial inflation.

In an independent multicurrency system, you can use the Calculate Destination Gain & Loss (tfgld5202m000) session to calculate the differences in values that are caused by shifting currency rates. LN posts the differences to a specific ledger account that you can specify in the Finance Company Parameters (tfgld0503m000) session.