Entering Multi-Currency Journals

A ledger transaction can contain up to four currency values: base currency, transaction currency, second base / reporting currency, and fourth currency. Business Unit Setup determines the currencies and posting rules that apply in your organisation. It also identifies the pivot currency which is the currency via which the base, transaction and second base/reporting currency values are calculated.

Note: The fourth currency can be calculated from any of the other available currencies, as defined in Business Unit Setup, and cannot be used as the pivot.

The Business Unit Setup is used in conjunction with a journal type definition to govern the information required for a multi-currency transaction. You can override your business unit currency posting rules for a particular journal type using Journal Types (JNT)..

Ledger Entry (LEN) displays, at most, the following currency rate and amount fields (depending on the form design and posting rules):

  • Transaction currency code, rate from pivot, and amount.
  • Base currency code, rate from pivot, and amount.
  • Second base or reporting currency code, rate from pivot, and amount.
  • Fourth currency code, rate from the value from which it is calculated, and amount.
Note: It may also display the memorandum amount
Note: Values in the fifth currency are only ever calculated when required. They are not calculated in Ledger Entry.

Some of the currency codes and rates required may be preset, if a journal preset applies to the journal type.

Entering the Currency Codes

The base currency code and second base or reporting currency code are fixed for the business unit. Therefore these codes appear automatically and cannot be changed. The fourth currency code may be fixed for the business unit, if this has been specified within Business Unit Setup.

Note: For this reason these codes may not even appear on the form.

The transaction currency can vary for each transaction, if an amount can be entered. This code must be entered. It may be provided by a journal preset. You may, or may not, be able to override the preset code, depending on whether the presets are enforced. For example, a particular journal type may only be used for invoices received in Euros and the journal preset defaults the transaction currency to EUR.

The fourth currency can also vary for each transaction and the same rules apply.

A default currency code can also be set for an account, or asset, or it may be derived by Business Rules. This default code overrides any preset currency code.

Entering the Currency Rates

The currency rates are picked up either from the Currency Period Rates (CNP) or from the Currency Daily Rates (CND), depending on the Use Daily Conversion Rate setting for the currency in Currency Codes (CNC). In some cases, the rate may be preset in Journal Presets (JNP). However, if a currency rate is not specified, the rate from Currency Rate Type defined in Journal Type (JNT) is used. If no Currency Rate Type has been setup the Default rate type is used. Subsequently if a rate tolerance check is required then the rate type in Journal Type (JNT) is also used.

Note: At least one daily or period currency rate must have been defined for the currency before you can enter a transaction in that currency.

If all four currency values are required on a transaction, four rates are entered or displayed. The rate for the pivot currency is always 1.0. The other rates (values 1, 2, and 3) are the rates required to convert from the pivot currency into the relevant currency. For example, if the pivot currency is the base currency (GBP) and a transaction currency of EUR is entered, the GBP to EUR rate is used as the transaction currency conversion rate. See 'How are Currency Rates Expressed?'

The fourth currency rate is the rate from the value from which the fourth currency is calculated, as defined in Business Unit Setup, to the fourth currency itself.

Note: You may want to edit the Ledger Entry forms to suppress the display of the pivot's rate.

Daily or Period Rates

Currency Daily Rates are used if in Currency Codes (CNC) the Use Daily Conversion Rates field is set to Yes, for either of the selected currencies. If a daily rate has not been defined for the transaction date entered in the transaction line, or within the days tolerance limit, you cannot enter the currency details. See 'How the Daily Currency Rates are Applied'.

If daily rates are not in use, then the appropriate period rate from the Currency Period Rates (CNP) record is used. Several currency period rates may be defined for a currency code. For example, different rates may apply to particular account ranges and periods, for a single currency code. The system selects the appropriate conversion rate to apply. See 'How are Period Rates Applied?'

If a rate is not found, Ledger Entry rejects the currency code.

Spot Rates

You can enter a spot rate for a transaction, which is different to the rate held in either Currency Period Rates (CNP) or Currency Daily Rates (CND). If you enter a spot rate and tolerance checking applies, the rate you enter is checked to ensure it is within the tolerance set for the original period or daily rate. The difference between the rate you enter and the predefined conversion rate must be within the tolerance percent. This prevents you from entering a widely inaccurate rate by mistake. See 'What is Rate Tolerance Checking?'

Note:  If you always use spot rates, you may want to define a default period rate with a rate of zero and no tolerance.

Entering the Currency Amounts

You must provide at least one amount for a transaction. This amount is used, with the currency rates, to calculate the other transaction amounts. If this amount is not entered in the pivot currency, it is always converted to the pivot currency first (because the first three currencies are converted via the pivot). See 'How the Pivot Currency Conversion Works' for an example of these calculations.

You would normally accept the calculated values. If you amend a calculated value, the conversion rate may be recalculated accordingly.

Adjusting the Calculated Values

If you enter two values and a rate which do not correspond to each other, the system requests you to change one of these entries. For example, if you entered a base value of 100.00, a transaction value of 150.00 and a rate of 2.0, you must alter the rate or one of the two values.

If the calculated rate and values are not those you want to use on the transaction, you should amend the rate or value to the one you want to see in use. You should also blank out the other value. The system then recalculates the correct value using the rate provided.