Multiple currencies (BL/DST)
Multiple currency pricing is controlled by the way you set up the Billing company. After you decide and specify the price in multiple currencies during company setup, you can select several options when pricing items in multiple currencies.
To avoid pricing in multiple currencies, all of your pricing setup must take place in the base currency for the company. The only requirement is a simple conversion from one currency to another based on the base currency for the customer.
If you want to price in multiple currencies, then you are required to set certain pricing parameters in your pricing definition, such as price bases, that are stored in different currencies.
Currency-based pricing
You can use currency-based pricing to price an item according to the currency that the customer orders in. Because the price is based on the currency exchange rate, the price is subject to exchange rate fluctuations.
You assign a price base to each currency in which customers can order the items. To calculate the customer price, decide at the company level whether to calculate the price base in your base currency or the order currency. You must make this decision at the company level. Select currency-based pricing to calculate the customer price in the order currency.
These examples show how your multiple currency pricing decisions and the currency-based pricing method affect the outcome of your pricing strategy:
| Example | Multiple currency flag | Currency-based pricing flag |
|---|---|---|
| 1 | No | No |
| 2 | Yes | Yes |
| 3 | Yes | No |
Example 1
You and your customers share the same currency. No multiple currency issues or requirements exist.
Example 2
Your company has clients in the United States, France, and Germany, and processes invoices in other currencies. Each currency such as dollars, francs, and marks has an assigned price base.
You can imply in this situation that at least some of the items you are selling are stocked in warehouses in different countries, and the sell price of these items is based on your cost in the local currency.
In this situation, you must establish base prices for these items in multiple currencies:
| Item | Price base name | Price base | Price list |
|---|---|---|---|
| FR-44PE | US Dollar | $10.00 | 90% |
| French Franc | Fr 10.00 | 90% | |
| Deutsche Mark | DM 25.00 | 90% |
A customer in France orders 10 FR-44PE items. This is the pricing for the item:
- Price base assigned for francs is Fr 10 for each FR-44PE item.
- Order total is 100 francs (10 * Fr 10).
- Price list for this customer is a 10 percent discount off the base, so the final price printed on the invoice is 90 francs (Fr 100 * 90%).
Before sending transaction data to General Ledger and Sales Analysis, you can convert the price from francs to your base currency in the Billing application.
Example 3
You process in multiple currencies but do not prefer currency-based pricing. Several clients are based in other countries, and prices do not vary based on the market. Since prices are stable, do not define a base for each currency used.
A French customer orders 10 FR-44PE items. The currency assigned to this customer is francs, so the order total is $100.00 (10 * $10.00). The Billing application calculates the price in your base currency and does not convert it to francs until order entry or re-price time. Then the Billing application takes the base currency total, multiplies it by the currency exchange rate, and prints the total in francs on the invoice.
You can use Billing to store the base currency amount and send transaction data to the General Ledger and Sales Analysis application.